Kathmandu. Despite the growing threat posed by global warming, the world’s major insurers appear to be lagging behind in addressing climate, biodiversity and social risks.
That’s according to a new report by ShareAction, a responsible investment NGO backed by WWF. The fourth edition of the Insurance Disaster Benchmark evaluated 40 of the world’s largest property and casualty insurance companies. According to the report, most companies have received poor grades for their climate-related policies. Allianz and Achmia were the only insurance companies to receive a B valuation.
According to the report, insurance companies continue to underwrite and invest in initiatives and activities that promote climate change and biodiversity loss. Climate-related disasters are becoming more frequent and costlier.
It is estimated that between 2015 and 2024, natural disasters caused about $280 billion in direct economic losses each year. Less than half of these damages are covered by insurance.
According to ShareAction, the industry’s progress on new climate commitments has also slowed since the previous benchmark was published in 2024. “Insurance is all about helping people recover from disasters, but this study shows that many insurance companies are adding fuel to the fire,” said Louise Marfani, policy director at ShareAction.
According to Marfani, insurance companies are exacerbating climate risks by supporting fossil fuel expansion through their underwriting and investment decisions. Which is increasing the number of fires, storms and floods. However, insurance is becoming expensive or unavailable in some areas.
The report also revealed that there are significant gaps in the policies of insurance companies. “73 per cent have no underwriting restrictions on upstream oil and gas expansion, and 33 per cent have no restrictions on coal,” the report said. However, underwriting restrictions related to biodiversity are rare. ’
Managing agents at Lloyds in London are among the weakest performers. Few have adopted coal restrictions or long-term net zero targets.
For this reason, ShareAction and WWF have urged insurance companies to strengthen their climate, biodiversity and social policies. The organizations also called on governments to develop stronger regulations to promote responsible business practices. –Agency
