Chubb is the first U.S. insurance company to announce that it is distancing itself from the coal industry.
The insurance company said Monday that it will stop investing in the coal industry. It also will put an end to selling policies to that go toward constructing new coal plants, and will cease to underwrite companies that generate more than 30% of their revenue from coal mining or supply electricity produced by coal.
And it’s doing all of this because of the climate crisis.
“Chubb recognizes the reality of climate change and the substantial impact of human activity on our planet,” said Evan Greenberg, the chairman and chief executive of Chubb, in a statement.
The company’s deadline to phase out investments for existing coal plants that exceed its 30% threshold will be 2022, at which time Chubb will begin the same process for utilities.
The news comes as the coal industry in the United States is facing an unending downward spiral. This week, one of the country’s largest coal producers, the West Virginia-based Revelation Energy LLC and its affiliate Blackjewel LLC, filed for bankruptcy. The companies employs roughly 1,700 people working in mining in Central Appalachia and at two large mines in Wyoming.
More coal plants closed during Trump’s first two years in office than during the entire first term of the Obama administration. And as of May, at least 50 coal plants have shuttered across the country under Trump. Even the government’s own data released recently by the U.S. Energy Information Administration shows coal production will hit a four-decade low in 2019 and drop again in 2020.
Chubb — which together with its subsidiaries invests around $2.9 billion in fossil fuel companies — joins a growing number of European insurers divesting from risky fossil fuels. Allianz in Germany, Italy’s Generali, the French firm Axa, and Lloyds of London have all strengthened their policies in recent years in order to distance themselves from coal investments and underwriting. Largely, this has been the result of climate activists pushing for a transition towards a clean energy economy.
Increasingly, though, insurance companies are also understanding the complexity of risks that surround fossil fuel investments. The world’s leading scientists have warned that in order to meet the goal of limiting global emissions to below 2 degrees Celsius the majority of fossil fuels must stay in the ground — meaning many companies’ assets would go unused, and would therefore be unprofitable.
Meanwhile, the industry is also feeling the impacts of increasingly damaging disasters fueled by climate change. According to ThinkProgress analysis of annual reports filed by 15 major U.S. insurers last year, natural disasters in 2017 cost the industry at least $14.5 billion in claims.
And insurance companies are not shying away from linking the growing uncertainty and severity of these types of events — mainly hurricanes and wildfires — to climate change.
“We understand that climate change potentially poses a serious financial threat to society as a whole, with implications for the insurance industry in areas such as catastrophe risk perception, pricing and modeling assumptions,” AIG has told its shareholders.
The wildfires in California, for instance, have been so devastating that one company, facing $64 million in fire-related insurance claims, went under because it couldn’t afford to pay out the claims.