of the people insurance industry In recent years, confusion has arisen in a series of situations. flood, fire,others due to climate change disaster. These catastrophes have forced airlines to pay out billions of dollars in insurance claims, and many have responded by increasing premiums in disaster-prone states such as: florida and Oregon Or withdraw from a particular market altogether.
But many of these companies also provide coverage for fossil fuel projects, such as pipelines and natural gas power plants, that would never be built without their support. This gives the insurance industry a unique role on both sides of the climate crisis. Even as insurance companies shoulder the costs of growing climate disasters and pass them on to their customers, they are also contributing to the problem by underwriting the very projects that warm the planet.
The law in Connecticut, the center of the U.S. insurance industry and home to some of the biggest insurance companies, could make insurers pay for the discrepancy. The bill, which just passed a committee vote in the state Senate, would move toward imposing fees on fossil fuel projects that companies insure in the state. The proceeds will be donated to the Public Resilience Fund, which undertakes seawalls and urban flood protection measures.
„We're asking (insurance companies) about how they've been responding in both directions on climate change,“ said Tom Swan, executive director of the Connecticut Citizen Action Group, an economic justice nonprofit that joins several environmental groups. It's important that we start holding people accountable.“ He worked with several environmental groups to lobby Congress to pass the bill. He said: „Even though interest rates are skyrocketing and people are exiting various sectors, they continue to underwrite and invest in fossil fuels at a much faster pace than their peers around the world.“ .
group pushed More proactive suggestions Last year's bill would have imposed a 5% fee on fossil fuel coverage issued by insurance companies in the United States, but the bill failed after critics raised several legal issues. Ta. In particular, the industry argued that the Constitution's Interstate Commerce Clause prohibits taxing a company's out-of-state operations.
The new version is Climate Resilience Act Under the proposal proposed by Democratic Gov. Ned Lamont, states would only be required to submit proposals for insurance schemes. The surcharge would apply only to fossil fuel projects that these companies insure in Connecticut, avoiding any constitutional issues.
This assessment applies to current coverage of existing infrastructure, as well as new pipelines and fuel terminals that need adequate insurance to attract lenders and investors. That means anyone covering the state's dozens of oil and gas-fired power plants will contribute to the resiliency fund.According to a report from the Connecticut Citizen Action Group and several other environmental nonprofits, the state's insurance companies invested $221 billion in fossil fuels.
Supporters argue that lowering fees would still raise tens or hundreds of millions of dollars for climate resilience. Connecticut received approximately $318 million in FEMA disaster assistance between 2011 and 2021, which equates to approximately $149 in per capita spending. According to the climate adaptation nonprofit Rebuild by design. This puts the state well below disaster-prone states like Louisiana, which received $1,736 in federal disaster aid per capita, but has no major disasters in the past 10 years, like Delaware. This far exceeds that of the other regions.
Eric George, president of the Connecticut Insurance Association, the state's largest insurance trade group, said the organization „strongly opposes“ any levy, but added that the bill is still under consideration.
The bill would be enacted similar to other states, including Vermont and Maryland. Introducing “polluter pays” legislation Holding oil producers accountable for climate change. Risarat Khan of the Sunrise Project, a nonprofit focused on energy transition policy, said the proposed Connecticut bill is a repeat of efforts to focus on areas where state regulators wield significant influence. Stated.
„People are seeing first-hand increases in insurance premiums related to climate change,“ he said. „There's a direct question: Why aren't state-level regulators using more of their authority to take local action?“
Benjamin Keyes, an economics professor and climate insurance risk expert at the University of Pennsylvania, said the importance of this funding mechanism may vary by state.
„One of the big problems is that fuel is collected and burned everywhere, but the pain of natural disasters is inherently local,“ he says. As such, he wondered whether this funding mechanism could be replicated by all communities, as it has had „little impact on fossil fuel production despite disasters in many regions.“ ' he questioned. For example, Florida doesn't have as much fossil fuel infrastructure as Connecticut, but it faces extreme weather events and other catastrophes far more frequently.
Although the bill is weaker than previous versions, supporters say passing it in the home of the country's insurance industry would send a message to the big companies still underwriting oil and gas projects. they claim.
„I think it's good policy, but it's very important from a narrative-setting standpoint,“ Swan said.