Federal Regulation

Consumer Groups Urge Federal Insurance Office to Focus on Insurance Industry Role in Addressing Climate Change and Its Impact on Consumers, Communities

Current Insurance Industry Practice of Passing the Cost of Climate Change from Polluters to Consumers and Communities Must End

 |  Press Release

Washington D.C.— Highlighting increasingly disastrous and expensive weather-related catastrophes, consumer organizations — Consumer Federation of America, the Center for Economic Justice, the Maryland Consumer Rights Coalition, and Consumer Federation of California — urged the Federal Insurance Office (FIO) to take a leadership role in guiding the insurance industry toward a Net Zero emissions goal and increasing protections for consumers facing the double risk of more dangerous seasons and escalating insurance premiums. In response to the FIO’s request for information on insurance and climate risk, the groups submitted comments addressing how FIO can best engage issues of rising insurance costs, decreasing availability of coverage, the particular vulnerabilities of communities of color and lower-income consumers, how insurers both contribute to and can combat this crisis, and how the FIO should respond. The complete letter can be downloaded here.

“Avoiding cataclysmic results requires the global community, and highly industrialized nations particularly, to make dramatic changes that will both reduce long-run exposure to climate risk and improve resiliency in the face of persistent near-and medium-term risks. The insurance sector is central to effectuating those responses,” the consumer organizations wrote.

The advocates focus attention on the role of insurers’ investment and underwriting decisions in exacerbating climate change. Companies that provide insurance coverage for the industrial activities most directly responsible for global warming, like coal-powered plants and oil pipelines, or support those activities through investments, are partly responsible for the catastrophes wrought by climate change, the groups said.  The climate-driven floods, hurricanes, wildfire, droughts, and other disasters place huge portions of the nation at increased risk of loss and leave consumers with higher insurance premiums or an inability to get coverage at all.

“The insurance industry is, in essence, down-streaming the burden of climate-change from the firms that create it to the communities that suffer under it,” the groups explained.

The organizations called on the Federal Insurance Office to develop climate risk workstreams to research and build a strategic response to the challenges found at the intersection of climate change and the insurance sector. The groups propose workstreams looking at the follow topics:

  • The insurance industry’s investing and underwriting practices that impact climate change;
  • The availability and affordability of property insurance and how climate change will impact, especially for lower-income communities and communities of color;
  • Coordinating a national effort to develop and implement strategies for mitigating climate risk, and reducing exposure to that risk. It should consider how insurance companies might contribute to this mitigation; and
  • Developing federal and regional strategies to meet expanding capital needs for insurance, especially for catastrophic risks and critical needs.

The groups concluded by calling on FIO “to develop an approach to convening thought leaders, collecting data, and developing strategies for confronting climate risk that emphasizes mitigation and resilience, affordability and availability, and accountability and encouragement. The insurance industry, its regulators, and its consumers have too much at stake to think small or avoid challenging topics.”

Contacts:
Michael DeLong, 925-708-1135
Doug Heller, 310-480-4170