Insurance on the Front Lines
Insurance is on the front lines of the climate crisis – yet the largest companies are insuring fossil fuel projects and investing in fossil fuel companies, even while raising rates and dropping policy holders in vulnerable states.
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Insurance is on the front lines of the climate crisis – yet the largest companies are insuring fossil fuel projects and investing in fossil fuel companies, even while raising rates and dropping policy holders in vulnerable states.
In 2023, the United States experienced a record number of weather- and climate-related disasters that each caused $1 billion or more in damages: 28 severe storms, floods, wildfires, winter storms, hurricanes, and droughts, according to the National Oceanic and Atmospheric Administration (NOAA).
The insurance industry stands on the front lines of this crisis. Every time a climate-related fire, flood, or storm damages or destroys a home or business, the policy holder expects their insurance company to help foot the bill for repairs and rebuilding. Unfortunately, as climate events become more common, major insurance companies have begun to cancel or restrict coverage in climate-vulnerable areas.
Meanwhile, insurance prices are rising for everyone, whether or not they live in an area with heightened climate risk. Homeowners insurance premiums are now up 21% from a year ago and 35% from two years ago nationwide, according to the 2023 Policygenius Home Insurance Pricing report.
Shockingly, despite clearly increased climate risks, the largest US insurance companies continue to support the chief cause of the climate crisis – the burning of fossil fuels – in two ways:
- By insuring fossil fuel projects
- By investing billions of dollars in fossil fuel companies.
Insuring Fossil Fuel Projects
Without insurance, fossil fuel companies cannot get loans or investments for their notoriously risky projects. This makes insurance the “Achilles heel” of fossil fuel projects.
While most of the large US insurance companies have set restrictions on underwriting coal, almost none have restricted underwriting conventional oil and gas projects according to Insure Our Future, a campaign of environmental, consumer, and grassroots organizations that holds the insurance industry accountable for its role in the climate crisis.
Three of the top eight US insurance companies — including Berkshire Hathaway, which owns GEICO and AM Guard insurance — maintain no policies whatsoever to limit underwriting and investment in fossil fuel projects, whether coal or oil and gas.
Berkshire Hathaway is especially notable: It fully owns 11 coal plants, partially owns 13 more, and ships millions of tons of coal by rail. The company’s CEO, Warren Buffett, has said climate change should not be a factor in its business decisions.
While it is difficult to find out which companies insure which projects, a recent report from Rainforest Action Network and Public Citizen identified 35 insurance companies underwriting liquified methane export terminal projects across the U.S Gulf South, including Chubb, Liberty Mutual, AIG, The Hartford, Travelers, Berkshire Hathaway, and Lloyd’s of London.
Investing in Fossil Fuel Companies
Insurance companies do not simply insure fossil fuel projects; they also invest billions of dollars from the premiums we pay into fossil fuel companies, according to the Investing in Climate Chaos database by Urgewald, a German environmental and human-rights NGO.
Berkshire Hathaway invests by far the most in fossil fuels of all US insurance companies, more than $95 billion. It is the 14th largest investor in fossil fuels overall and the top investor in Chevron and Occidenal Petroleum. Its subsidiary Berkshire Hathaway Energy owns 11 coal plants outright and has stakes in 18 more. Its railroad company ships coal across the country
State Farm has the second-most invested in fossil fuels of any US insurance carrier: $20.6 billion invested in 65 companies, including $10.7 billion in shares and $9.9 billion in bonds. It is the 15th-largest investor in Exxon.
“It seems nonsensical at best—and complicit at worst—for State Farm to carefully factor climate risk from wildfires into its homeowner’s insurance policies, refusing in some cases to provide such policies at all, while apparently ignoring the heightened climate risk that its investment portfolio is helping to create,” Sens. Sheldon Whitehouse (D-RI), Ron Wyden (D-OR), and Bernie Sanders (I-VT) wrote to State Farm in June 2023.
Other high-level investors include USAA, through its investing arm Victory Capital, at over $10 billion; AIG at over $9 billion; Nationwide at almost $7 billion; and Allstate at over $4 billion.
| Insurance Company | Shares (US$) | Bonds (US$) | # of Companies Invested In | Total Fossil Fuel Investments (US$) |
| Berkshire Hathaway (parent of GEICO) | 95.4 billion | 0.3 billion | 8 | 95.8 billion |
| State Farm | 10.7 billion | 9.9 billion | 65 | 20.6 billion |
| USAA (through Victory Capital) | 8 billion | 3.2 billion | 282 | 11.2 billion |
| AIG | 1.2 billion | 8.5 billion | 275 | 9.7 billion |
| Nationwide | 0 | 7.2 billion | 77 | 7.2 billion |
| Allstate | 7 million | 4.5 billion | 111 | 4.5 billion |
| Travelers | 0 | 1.9 billion | 49 | 1.9 billion |
| Liberty Mutual | 0 | 1.8 billion | 65 | 1.8 billion |
| The Hartford | 166 million | 1.2 billion | 91 | 1.3 billion |
Investing in Climate Chaos database by Urgewald. Data collected in May 2024. Figures rounded to first decimal.
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