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Episode 45

With an estimated $30 trillion in assets under management, the insurance industry is a huge (but mostly invisible) force in influencing the direction of the global economy.

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Yet insurance companies are doing incredibly little to fight climate change –  and get away with it: Out of the largest 30 insurers in the world, 29 pretty much do not take the Paris Climate Agreement at all into account and continue to back new oil, gas and coal as well as collect vast premiums from existing oil, gas and coal projects. Collectively, their Paris Climate Agreement-related policies, where these exist at all, amount to not much more than a giant pile of  green-washing guff.

Photo by Assaad W. Razzouk

Insure Our Future report on how the insurance industry is actually contributing to global warming by perpetuating our dependence on dirty fossil fuels:

In Episode 44 of The Angry Clean Energy Guy, I bashed banks and promised that I would come back to bash insurance companies, accountants, lawyers and rating agencies. Today I’m going to focus on bashing insurance companies because they are doing so incredibly little to fight climate change.

First, let me give you some context for where this bashing is coming from.

Every time an engine fueled by oil, by gas or by coal runs, we emit CO2 and that greenhouse gas has to go somewhere, it does not miraculously disappear. Either it stays in the atmosphere or it goes into our oceans to be released later into our atmosphere. In our atmosphere, CO2, alongside other global warming gases that we send a lot alongside it (like methane for example, from oil and gas and from agriculture), prevent Earth’s natural cooling cycle from working because they trap the heat near the surface of Earth and this in turn causes global temperatures to rise with devastating effects.

Our CO2 and other greenhouse gases ‘wild party’ has already led to a rise in global temperatures of at least one degree centigrade.  We’re a hundred percent locked in for one-and-a-half-degree centigrade rise and worse is probably also pretty much guaranteed.


How do we know this? We know this because when we talk about carbon dioxide, we talk about it in parts per million. This number, parts per million, tells us how many parts of carbon dioxide there are in one million parts of air, so if we say that carbon dioxide is at four hundred parts per million, for example, which is abbreviated to PPM, that then means that in one million particles of air, there are four hundred particles of carbon dioxide.

Let’s focus on this parts per million concept for carbon dioxide for a minute.

It took us 5,000 years to increase the global average atmospheric carbon dioxide from 270 to 280 parts per millions. In other words, for over 5,000 years, nothing happened.

Then, in just one hundred years, we moved the parts per million from 280 to 290 PPM.

Then it gets worse.

We moved carbon dioxide from 290 parts per million to 300 parts per million in just 40 years.

The rate kept accelerating as we kept pumping CO2 into the atmosphere, and it took just four years to move from 400 parts per million to 410 parts per million.

In other words, we’ve moved CO2 concentration from a historically stable number of about 270 to over 410 today, and we’ve accelerated that rate of change. We did all that in the past 150 years or so.

The scientific consensus is that the planet is healthy for humanity at a level of 350 parts per million. But right now, we’re at 414 parts per million, up three parts per million from exactly a year ago.

Remember, we’ve just been through a global pandemic and we have slowed the rise in emissions, but this was nowhere near good enough.

Right now, at 414 parts per million, it’s the first time that our planet’s atmosphere has been at that level since before modern humans existed millions of years ago. Humans have never known a world like this because the last time Earth’s atmosphere contained this much CO2 was more than 3 million years ago and at that time, global sea levels were several meters higher and Antarctica was partly blanketed in forests.

Today, we are moving fast towards 450 parts per million. We add three parts per million each year, so to go from 414, which is where we are now, to 450, it will take us 12 years and at that point, when we hit 450, which we will, we will have a 50% chance of stabilizing average global temperature at two degrees over the pre-industrial period.

Let me put this in perspective for you.  In a world which is two degrees Celsius warmer, we’re going to have 25% more hot days, 25% more heat waves, more wildfires, 40% of the global population exposed to at least one severe heat wave every five years, more droughts, worse floods and more extreme weather events like cyclones and typhoons.

You can forget about it if temperatures rise to three or four degrees, because then we would enter a ‘hot house’ earth stage that would basically make many parts of the planet uninhabitable.

I hope what you’re taking away is that even though we’ve been talking about climate change for 40 years, in effect, our global collective action to date has resulted in less than nothing. In other words, we did not decrease emissions and we did not even slow their rise.

With that, let’s get back to the insurance industry and talk about how so incredibly little they’re doing to contribute to fighting climate change.

Welcome to Episode 45 of The Angry Clean Energy Guy with me, Assaad Razzouk. I am so happy you’re here and a Happy New Year to all of you, which I very much hope will be soon COVID-free for the entire world.


I don’t even know where to start with the insurance industry.

First, let’s acknowledge that while banks make a lot more noise, insurance companies, who are just as omnipresent, are much quieter and therefore we often forget about them, but they are everywhere. There are companies that generally offer risk management to the rest of us and there are many types of insurance companies. You’ve got accident and health companies, which are probably those that we all know best, these are the people who sell us our health insurance, for example. Then you’ve got life insurance companies that pay a death benefit as a lump sum when their beneficiaries die. Then you’ve got property and casualty companies that insure against accidents of non-physical harm. There are insurance companies that then offer very specific policies, for example: kidnapping and ransom or medical malpractice or professional liability insurance. Then you’ve got reinsurers, which is, insurance that insurance companies buy to protect themselves from excessive losses.

By and large, we all pay insurance companies pretty much automatically each month for all sorts of things and then never really think about them unless we want to get a payout from our health or house insurance policy, at which point we generally discover how difficult it is to get any money out of them.


As a result of the fact that we keep paying them because we are forced to insure this, that or the other, while they are always very reluctantly paying us anything back, the insurance sector accumulated something like $30 trillion in assets under management.

That’s money that they then invest, either directly or through funds or through asset managers or through banks.

Not only is the insurance sector huge with an enormous amount of financial power, it’s also a sector easily forgotten, because it makes a lot less noise than banks and because we really think about them mostly in a passive way.

I don’t go to my insurance company weekly to withdraw cash, nor do I use my insurance company debit card or credit card and I think of them generally as painful to get any money out of any way.

They’re there with all that money under management, and almost all of it is invested in direct contravention of the Paris Climate Agreement.

In other words, almost everything insurance companies do, in terms of investing, has nothing to do with fighting climate change and worse, nobody really focuses on it too much.

Remember, to fight climate change, we cannot have any new oil, gas, or coal. None. Yes at the same time, no new oil or gas project, or a new ship that is carrying gas, or a new coal plant can be built without a slew of associated insurance policies, which insurance companies are, by and large, absolutely delighted to write.

Even reports analyzing the insurance industry’s performance on climate change, are few and far between. A recent one called “Insuring our future” developed a scorecard on insurance and climate change. Published by a broad collection of NGOs, it catalogs the industry’s failure to really do much at all.


“Insuring our Future” focuses on thirty leading insurers and tries to assess their policies on coal, on oil and on gas.

The NGOs wrote to the thirty insurers asking them questions and were completely ignored by ten of the thirty companies.  Twenty responded in some fashion.

If you want to be generous, you would generally say that European insurance companies are doing something, while US and Chinese and Japanese companies are doing nothing. That’s the super high-level conclusion.  Then if you look into the details, you see that even insurers that are supposedly progressive on climate change are really just focused on coal and the dirtiest types of oil and gas, for example tar sands projects or Arctic drilling.

I’ll give you some examples: AXA, Swiss Re, Zurich and Allianz are supposed to be leaders in terms of the insurance industry’s effort to fight climate change, but even these guys really just cover tar sands and coal. In other words, they’re quite happy to insure, right now, new oil and gas projects, and even in some cases, new coal projects, but have some controls on only the absolute worst kind of new oil, gas and coal projects.

By contrast, companies like AIG, Berkshire Hathaway and Travelers are very happy to underwrite, right now, coal, oil, and gas without any restrictions.

While there are therefore some restrictions, from some companies, on new coal, there are almost no restrictions on oil and gas, with the exception of some limited restrictions on tar sands and Arctic drilling.

There’s only one company, an Australian insurer called Suncorp, that’s actually ended cover for all new oil and gas production.

The insurance industry is missing in action when it comes to ending coverage for new oil and gas projects. In other words, the insurance company is doing nothing in terms of helping achieve the goals of the Paris Climate Agreement.

What these companies must do is stop completely insuring any new coal projects, any new coal companies, any new oil expansion, any new gas expansion, and then build from there. They should also generally phase out insurance for oil and gas companies, in line with the Paris Climate Agreement: After 2030 or 2035, you should not be able to insure any coal, oil or gas project, as in, whatsoever, in any country, for any reason.

Frankly the insurance industry’s performance is quite appalling because the insurance industry is supposed to be a risk management industry. They’re supposed to keep us safe, but that is the absolute last thing that they’re doing in terms of climate change. Not only are they fueling more climate change by insuring new oil, new gas and new coal, but they themselves are also exposed to investing in all these bad sectors.  Because their assets under management represents such a huge number, $30 trillion, their exposure is, importantly, a problem for our entire financial system.


Now the good news.

Coal mining and coal power companies around the world are finding it more difficult to get insurance with European and Australian companies.  US insurers, however, are still insuring coal as if we were in the 1950s. But we are beginning to see some change even in the United States, because even those insurers still continuing to cover coal are becoming more cautious.

Why are they becoming more cautious? Because they woke up and smelt the coffee. Coal companies and coal power plants are closing, and even sleepy insurance companies have finally noticed.

Speaking of sleepy, the sleepiest of all are the Japanese. Japan’s major insurers, Sompo, Tokyo Marine and MS&AD, have all announced policies with large loopholes, and by and large, their policies are completely inconsistent with the long-term goals of the Paris Agreement.

I’m less worried about the Chinese, because as China moves decisively to implement its net zero by 2060 target, its insurance companies will fall in line.

Then when you look at oil and gas, what you see is that insurance for that sector is highly concentrated. Only ten companies cover 70% of the market and the biggest are AIG, Travelers, Zurich, and Lloyds and these guys are all sleeping at the wheel. You would think we still are in the 1980s: Just nine insurance companies have tar sands limitations, in terms of what they will insure, and just one has oil and gas limitations. Everybody else is very happy to insure any new oil and gas and that means out of the top thirty companies in the world, twenty-nine would do pretty much anything still today, except for tar sands, which twenty are still very happy to do.

This is frankly a scandal because insurance companies have a lot of climate power and what they will insure or won’t insure matters.


For example, there’s a proposed coal mine in Australia, initially known as Adani Carmichael then subsequently rebranded as “Bravus Mining and Resources”. That coal mine alone is a carbon bomb that would produce 4.6 billion tons of CO2 over its lifetime, roughly 8 times Canada’s annual CO2 emissions. Adani Carmichael has been fought in Australia for almost a decade in a relentless environmental campaign which now has 32 insurance companies ruling out backing it. If this proposed coal project is not insured, it won’t go ahead and that’s the best way to fight it. It’s more efficient than counting on government action, and more direct than citizen action.

There’s another project where probably the same approach should be taken and that’s the Canadian government’s Trans Mountain Pipeline, which is a pipeline basically intended to ensure that Canada can pump more tar sands oil, which is the dirtiest form of oil possible, and then ship it. That’s all new oil which we cannot have. So far, 150,000 people have signed a petition calling on Lloyd’s of London, AIG, Liberty Mutual, Chubb, W. R. Berkley and other insurers to end their support for this project, but still some of them hang on. I don’t know how these companies signed up to the project to start with, but it’s good that Zurich, Talanx and Munich Re for example aren’t proceeding. But that’s not enough, that’s just three of them and there are many more that are willing to basically write any business without thinking about either their own exposure (it’s bad business), or the climate change impact (the projects are totally not in line with the Paris Climate Agreement).


The irony is that these insurance companies are users of actuarial science. They’re supposed to be proponents of scientific rigor, they’re supposed to be ‘kings’ of risk management, and what do they do? They forget to price climate risk into their policies to the oil, gas, and coal sectors. That goes to show, in quite stark terms, the incompetence clearly rampant in that sector because if they were competent, they would see by now that climate change was a risk, wouldn’t they?

So, in case they haven’t, let’s remind them.

Dear Insurance Companies, coal is uninsurable. Therefore, none of you should be insuring any new coal mines or coal power plants, and you should all be looking at your existing coal sector policies and I would guess, significantly increasing the premiums and making therefore these projects even less economic than they already

Another thing, Dear Insurance Companies, is that you should be revisiting your projections for oil and gas, especially new oil and gas, and similarly, your premiums to these sectors should significantly increase because you are not taking into account climate risk into your projections and you are therefore exposing yourselves to financial losses. If you did the correct math, what would happen is that the cost of capital of these projects would go up, some of them would become uninsurable and many would either stop or be phased out.

Finally, Dear Insurance Companies, please think as you wield your shareholder vote on that $30 trillion that you’re investing around and do not vote against climate change resolutions nor provide funding to anti-climate science lobbies and politicians.  You can do so much better. And you must.


I want to close by talking about Lloyd’s of London.

Lloyd’s of London, the world’s biggest insurance market, made headlines in December by announcing it was going to end new investments in coal, oil sands and Arctic energy by 2022. Apparently, the Lloyd’s Corporation and its members would also phase out existing investment in companies which derive 30% or more of their revenues from coal, oil sands and Arctic energy by the end of 2025. Finally, Lloyd’s said that it was asking its members to phase out the renewal of existing cover to coal, oil sands and Arctic by January 1st, 2030.

That announcement by Lloyd’s is a perfect example of what I’m talking about. Notice first that they’ve completely ignored the Paris Climate Agreement because they will continue to insure new oil and new gas. They’ve only stopped, or they will only be stopping, insuring oil sands and Arctic energy, but everything else seems to be just fine to them. Even existing policies for coal, Arctic and oil sands are just fine until 2030. But as you heard at the beginning of this podcast, by 2030 we’re atmospheric CO2 concentration is going to be at 450 parts per million and that means that we’re going to have two degrees pretty much locked in and that means that Lloyd’s of London is setting up its own insurance companies to realize enormous losses that will wreck the insurance sector.

I don’t understand the logic any of these people are using and I don’t understand their math either.

I’m not even done yet: In Episode 46, coming up soon, you’ll hear why accountants, lawyers and rating agencies aren’t doing much better.

Thank you so much for listening to this Episode 45 of The Angry Clean Energy Guy with me, Assaad Razzouk and have a great couple of weeks.

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About Me

There is so much to be angry about, if you are a clean energy guy.

Every day, so many things that happen around the world make me angry when I look at them with lenses colored by the climate change chaos unfolding everywhere around us. And I am especially angry because I know we can solve the climate change crisis if we were only trying.

Each week, I will share with you a few topics that struck me and that I was very angry about – and this will generally have to do with climate change, solar or wind power, plastic pollution, environmental degradation, wildlife, the oceans and other related topics.

Assaad Razzouk

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