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'The Insurance Industry Is the Fossil Fuel Industry' Janine Jackson ([link removed])


Janine Jackson interviewed writer/researcher Derek Seidman about insurance and climate for the October 4, 2024, episode ([link removed]) of CounterSpin. This is a lightly edited transcript.

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Janine Jackson: As we watch images of devastation from Hurricane Helene, it's hard not to hold—alongside sadness at the obvious loss—anger at the knowledge that things didn't have to be this way. Steps could have been, still could be taken, to mitigate the impact of climate change, and making weather events more extreme, and steps could be taken that help people recover from the disastrous effects of the choices made.

As our guest explains, another key player in the slow-motion trainwreck that is US climate policy—along with fossil fuel companies and the politicians that abet them—is the insurance industry, whose role is not often talked about.
WaPo: Home insurers cut natural disasters from policies as climate risks grow

Washington Post (9/3/24 ([link removed]) )

Derek Seidman is a writer, researcher and historian. He contributes regularly to Truthout ([link removed]) and to LittleSis ([link removed]) . He joins us now by phone. Welcome to CounterSpin, Derek Seidman.

Derek Seidman: Hey, thank you. Great to be here.

JJ: In your super helpful piece ([link removed]) for Truthout, you cite a Washington Post story ([link removed]) from last September. Here's the headline and subhead:

Home Insurers Cut Natural Disasters From Policies as Climate Risks Grow:

Some of the largest US insurance companies say extreme weather has led them to end certain coverages, exclude natural disaster protections and raise premiums.

I think that drops us right into the heart of the problem you outline in that piece. What's going on, and why do you call it the insurance industry's “self-induced crisis"?

DS: Thank you. Well, certainly there is a growing crisis. The insurance industry is pulling back from certain markets and regions and states, because the costs of insuring homes and other properties are becoming too expensive to remain profitable, with the rise ([link removed]) of extreme weather ([link removed]) . And so we've seen a lot of coverage in the past few months over this growing crisis ([link removed]) in the insurance ([link removed]) industry.
Derek Seidman

Derek Seidman: "The insurance industry itself is a main actor in driving the rise of extreme weather, through its very close relationship to the fossil fuel industry."

But one of the critical things that's left out of this is that the insurance industry itself is a main actor in driving the rise of extreme weather, through its very close relationship to the fossil fuel industry. And in this narrative in the corporate media, the insurance industry on the one hand and extreme weather on the other hand, are often treated like they're completely separate things, and they're just sort of coming together, and this “crisis” is being created, and it's a real problem that the connections aren't being made there.

So I guess a couple things that should be said, first, are that the insurance industry is the fossil fuel industry, and its operations could not exist without the insurance industry.

We can look at that relationship in two ways. So first, of course, is through insurance. The insurance giants, AIG, Liberty Mutual and so on and so on, they collectively rake in billions of dollars every year in insuring ([link removed]) fossil fuel industry infrastructure, whether that's pipelines or offshore oil rigs or liquified natural gas export terminals. This fossil fuel infrastructure and its continued expansion, this simply could not exist without underwriting ([link removed]) by the insurance industry. It would not get its permit approvals, it would just not be able to operate, it couldn't attract investors and so on. So that's one way.

Another way is that, and this is something a lot of people might not be aware of, but the insurance industry is an enormous investor in the fossil fuel industry. Basically, one of the ways the insurance industry makes money is it takes the premiums, and it pools a chunk of it and invests those. So it's a major investor. And the insurance industry, across the board, has tens of billions ([link removed]) of dollars invested in the fossil fuel industry.

And this is actually stuff that anybody can go and look up, because some of it's public. So, for example, the insurance giant AIG, because it's a big investor, it has to disclose its investments with the SEC. And earlier this year, AIG disclosed that, for example, it had $117 million invested in ExxonMobil, $83 million invested in Chevron, $46 million in Conoco Phillips, and so on and so on.
Jacobin: Insurance Companies Are Abandoning Homeowners Facing Climate Disasters

Jacobin (2/7/22 ([link removed]) )

So, on the one hand, you have this hypocritical cycle where the insurance industry is saying to ordinary homeowners, who are quite desperate, we need to jack up the price on your premiums, or we need to pull away ([link removed]) altogether, we can't insure you anymore—while, on the other hand, it's driving and enabling and profiting from the very operations, fossil fuel operations, that are causing this extreme weather in the first place, that the insurance industry is then using to justify pulling back from insuring just regular homeowners.

JJ: This is a structural problem, clearly, that you're pointing to, and you don't want to be too conspiratorial about it. But these folks do literally have dinner with one another, these insurance executives and the fossil fuel companies. And then I want to add, you complicate it even further by talking about knock-on effects, that include making homes uninsurable. When that happens, well, then, that contributes to this thing where banks and hedge funds buy up homes. So it's part of an even bigger cycle that folks probably have heard about.

DS: Yeah, absolutely. This whole scenario, it's horrible, because it impacts homeowners and renters. If you talk to landlords, they say that the rising costs of insurance are their biggest expense, and they are, in part, taking that out on tenants by raising rents, right?

But it also really threatens ([link removed]) this global financial stability. I mean, with the rise of extreme weather, and homes becoming more expensive to insure, or even uninsurable, home values can really collapse. And when they collapse, aside from the horrific human drama of all that, banks are reacquiring foreclosed homes that, in turn, are unsellable because of extreme weather, and they can't be insured.

The big picture of all this is that it leads to banks acquiring a growing amount of risky properties, and it can create a lot of financial instability. And we saw what happened after 2008, as you mentioned, with private equity coming in and scooping up homes. And so, yeah, it creates a lot of systemic financial instability, opens the door for financial predators ([link removed]) like private equity and hedge funds to come in.

JJ: And it seems to require an encompassing response, a response that acknowledges the various moving pieces of this. I wonder, finally, is there responsive law or policy, either on the table now or just maybe in our imagination, that would address these concerns?
Insure Our Future, Not Fossil Fuels

Insure Our Future ([link removed])

DS: There are organizers that are definitely starting to do something about it, and there are some members of Congress that are also starting to do something about it.

For this story, I interviewed some really fantastic groups. One of them is Insure Our Future ([link removed]) , and this is sort of a broader campaign that is working with different groups around the country, and really demanding that insurers stop insuring new fossil fuel build-out, that they phase out their insurance coverage for existing fossil fuels, for all the reasons that we've been talking about today.

At the state level, there's groups that are doing really important and interesting things. So one of the groups that I interviewed was called Connecticut Citizen Action Group ([link removed]) , and they've been working hard, in coalition with other groups in Connecticut, to introduce and pass a state bill that would create a climate fund ([link removed]) to support residents that are impacted by extreme weather. (Connecticut has seen its fair share of extreme weather.) And this fund would be financed by taxing insurance policies in the state that are connected to fossil fuel projects. So it's also a disincentive to invest in fossil fuels.

In New York, a coalition of groups and lawmakers just introduced something called the Insure Our Communities ([link removed]) bill. And this would ban insurers from underwriting new fossil fuel projects, and it would set up new protections for homeowners that are facing extreme weather disasters.

I spoke to organizers in Freeport, Texas, with a group called Better Brazoria ([link removed]) , and these are people that are on the Gulf Coast, really on the front lines. And Better Brazoria is just one of a number of frontline groups along the Gulf Coast that are organizing around the insurance industry, and they're trying to meet with insurance giants, and say to them, “Look, what you're doing is, we're losing our homeowner insurance while you're insuring these risky ([link removed]) LNG plants that are getting hit by hurricanes, and fires are starting,” and trying to make the case to them that this is just not even good business for them.

And then, more recently, you've seen Bernie Sanders and others start to hold the insurance industry's feet to the fire a little more, opening up investigations ([link removed]) into their connection to the fossil fuel industry, and how this is creating financial instability.
Truthout: As Florida Floods, Insurance Industry Reaps What It Sowed Backing Fossil Fuels

Truthout (9/27/24 ([link removed]) )

So I think this is becoming more and more of an issue that people are seeing is a real problem for the financial system, and it's something that we should absolutely think about when we think about the climate crisis, and the broader infrastructure that's enabling the fossil fuel industry to exist, and continue its polluting operations that are causing the climate crisis and extreme weather. So I think we're going to see only more of this going forward.

JJ: All right, then, we'll end it there for now.

We've been speaking with Derek Seidman. You can find his article, “As Florida Floods, Insurance Industry Reaps What It Sowed Backing Fossil Fuels,” on Truthout.org ([link removed]) . Thank you so much, Derek Seidman, for joining us this week on CounterSpin.

DS: Thank you.
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