US Insurance Giants Worsening Climate Crisis, Biodiversity Loss, and Human Rights Violations: Report

The world’s leading insurance companies, especially U.S. ones, are underwriting and investing in industries that drive planetary heating, destroy ecosystems, and violate human rights, according to Insuring Disaster, a new report released Wednesday by a United Kingdom-based financial industry watchdog.

“The U.S. insurance industry is burying its head in the sand as the rest of the world races to embrace a greener, cleaner, and more equitable future.”
—Felix Nagrawala, ShareAction

In what it described as the first comprehensive assessment of insurers’ environmental, social, and corporate governance (ESG) credentials, ShareAction analyzed and ranked how 70 of the world’s biggest insurance companies—together responsible for assets totaling $22 trillion—are approaching “responsible investment governance,” the climate emergency, biodiversity loss, and human rights.

In contrast to their reputation as “risk experts” who assess, manage, and help reduce social and environmental risks, “the majority of large insurers… fail to adequately address systemic risks such as climate change and biodiversity loss,” wrote the authors of the report, which was based on company surveys and an examination of publicly available data.

Almost half (46%) of insurers received an E, the lowest grade, while another 17% received a D rating. Just 16% demonstrated a “relatively strong performance” that merited a rating of B or higher. Yet, “even the leading insurer scored just over 50% of the available points,” the report said. “On average, insurers scored only 12% of all available points.”

“We hope this unprecedented overview of the industry offers a wake-up call to insurers,” report co-author Felix Nagrawala said in a statement. “These rankings must improve—and quickly—if the industry hopes to survive a future built on renewables and equity, not fossil fuels and slave labor.”

No insurer received an AA or AAA rating, although five European companies received an A grade. The performance of U.S. insurers, meanwhile, was remarkably poor. ShareAction gave an E to 75% of U.S. insurance companies, compared with 52% in Asia and 22% in Europe. 

Of the 12 lowest-ranked insurers with a property and casualty business, half were U.S. insurance giants—Nationwide, AIG, Allstate, Genworth Financial, Protective Life, and Travelers—that scored 5% or lower on issues of governance, climate, biodiversity, and human rights.

Furthermore, of the 15 lowest-ranked life and health insurers, which scored 3% or lower on the four categories being evaluated, nine were U.S. companies: RiverSource, Northwestern Mutual, Talcott Resolution, Pacific Life, Lincoln Financial Group, Protective Life, MassMutual, Brighthouse Financial, and Aflac.

“The U.S. insurance industry is burying its head in the sand as the rest of the world races to embrace a greener, cleaner, and more equitable future,” said Nagrawala. “Despite the sector’s expertise in identifying, forecasting, and managing risk, it continues to support companies responsible for climate change, including those engaged in coal, tar sands, and Arctic oil and gas.”

Disaggregated results from the study showed that while the world’s top insurers received an average score of 27% on the topic of governance, they performed even worse on the climate crisis (11%), human rights (8%), and biodiversity (3%).

By continuing to underwrite and invest in fossil fuel extraction and disregard the well-being of working people—by neglecting dangerous workplace conditions, gender and racial discrimination, child and forced labor in supply chains, and the forced displacement of communities—insurance companies, particularly U.S. ones, are exacerbating environmental and social crises even more than other actors in the financial sector with stronger ESG policies and practices, the report said.