In Hurricane Ian’s Wake, Insurers are Still Fueling the Climate Crisis

Hannah Saggau, Insurance Campaigner for Public Citizen’s Climate Program

Floridians are beginning the long road to recovery in the wake of Hurricane Ian, which is shaping up to be one of the costliest storms in the nation’s history. Insured losses are projected to reach up to $75 billion — only a small fraction of the overall damage given the large swaths of Floridians without flood insurance.

Ian’s rapid intensification has been clearly linked to climate change, and mega-storms like this will only get worse until the fossil fuel industry stops polluting and the world transitions to clean energy. For homeowners — and their insurers — this will translate to more losses from climate-driven extreme weather in the years to come.

In Florida, the insurance market has faced a particular confluence of climate-related challenges. The state’s geography makes it highly vulnerable to extreme weather, including a string of devastating hurricanes from 2016–2018.

Insurance companies have mostly responded by jacking up rates and withdrawing from disaster-prone areas where they can no longer turn a profit. Add to this rising rates and dwindling availability of reinsurance (coverage for primary insurers), in part due to climate change, and you have a full-on crisis.

A dozen insurers went under in Florida over the past two years, including six in 2022.

So far this year, over 400,000 Floridians lost coverage because their insurers went insolvent or they couldn’t afford the rate hikes. Several months ago, a subsidiary of AIG dropped coverage for thousands of homeowners in Florida.

While the climate crisis has pushed insurance markets in Florida and across the country to the edge, what’s often overlooked is how insurance companies are also actively contributing to the climate crisis by insuring and bankrolling the fossil fuel industry’s expansion.

Notably, AIG is one of the world’s largest insurers for the oil and gas industry. This example reveals how some insurers are not just abandoning customers when climate harms become too devastating — they are also contributing to those harms.

AIG isn’t the only one. Other big U.S. insurers including Chubb and Travelers are also providing crucial coverage that props up the fossil fuel industry. Insurance is a key pillar of support for the fossil fuel economy: without insurance, oil and gas companies can’t finance or build new fossil fuel projects that increase climate pollution.

These companies can simply stop providing coverage in disaster-prone areas when the damages get too intense. But many people in Florida and other states heavily impacted by climate disasters don’t have that option.

Insurers are fueling a worsening climate crisis and leaving homeowners and taxpayers with a multi-billion-dollar bill.

A growing number of European insurance companies are taking responsibility for their role in the climate crisis and ruling out insurance for oil and gas expansion — it’s too risky for the insurers themselves, their customers, and our planet.

Most recently, Munich Re, the world’s largest reinsurer, announced that it will stop supporting many new oil and gas projects. Notably, no U.S. insurers have followed suit — though Bermudan insurer Fidelis became the first in North America to adopt oil and gas restrictions last month.

Earlier this year, AIG adopted new restrictions on support for coal, tar sands, and Arctic energy projects, as well as a net zero target. However, climate scientists and energy modelers have established that we cannot afford to build any new fossil fuel infrastructure if we’re to reach net zero by 2050 and avoid the most catastrophic climate impacts.

As a top global oil and gas insurer, AIG must prove its climate commitments are serious by ruling out support for all fossil fuel expansion.

The North American insurance industry accounts for around 40% of the total oil and gas underwriting market. If these insurers ended coverage for the oil and gas industry’s expansion, it would be a massive win for communities at the frontlines of the climate crisis.

In the wake of devastating disasters like Hurricane Ian, it’s absurd that companies are continuing to finance, insure, and build new fossil fuel projects that will lock us into dirty energy sources for decades to come — and climate chaos for much longer. To meet their responsibility to manage risk for their customers and their own businesses, insurance companies must address their role in fueling the climate crisis and end support for new oil and gas projects.