The insurance industry’s efforts to grapple with climate change appear to be coming to a head, all while insurers continue to underwrite fossil fuel projects. AIG has joined State Farm and Allstate in refusing to sell homeowners’ insurance policies in certain areas around the country. “The risk is unprecedented and the peak risks, which are what cause insurance companies to worry about insolvency, are the ones having the most change with climate,” Nancy Watkins, of insurance consulting firm Millman Inc., told Bloomberg. “What we should expect to see is more of these pockets of insurance unavailability, where the market contracts.”
Despite the risks posed by climate change, however, many firms are still insuring fossil fuel companies and projects. Late last week, the Senate Budget Committee demanded answers from seven insurance firms — including AIG and State Farm — about their underwriting of the fossil fuel industry. Meanwhile, California insurance regulators will consider changing how climate change can be included in how property rates are assessed, and the Texas legislature passed a law targeting insurance companies’ consideration of environmental, social, or governance (ESG) factors when setting rates. (Homeowners insurance: Bloomberg $, Wall Street Journal $; Senate letter: Washington Post $, E&E $, E&E $; California: E&E $; Texas: Floodlight, via Texas Tribune)