Insurers have come a long way on climate change, but they have a long way to get where they need to be to deal with a more hazardous planet.

That was the assessment from Washington Insurance Commissioner Mike Kreidler, a regulator who has spent three decades pushing insurers to disclose more about their investments and activities surrounding fossil fuels and to do more to address climate change.

Kreidler’s assessment summed up the tone of Insurance Journal’s hour-long webinar in late-June focused on climate change and insurance.

Joining Kreidler were panelists Samantha Dunn, head of sustainability underwriting, vice president sustainability, Swiss Re, and Steven Rothstein, managing director of the Ceres Accelerator for Capital Markets at Ceres, a sustainability nonprofit organization that works with investors and companies.

“I really think we’ve come a long way in the sense that insurers are much more willing to step up,” the nation’s longest serving commissioner said.

When Kreidler started his long campaign to get insurers to consider climate change in their investments and underwriting strategies, few were onboard with his ideas. The phrase “climate change” was a phrase rarely heard from the sector.

The ubiquitous attitude was that insurers had little to do with climate change, as their activities left a minimal carbon footprint. Another common refrain was that insurance renewals come annually, so insurers need only be concerned with the here-and-now of this year — meaning their businesses couldn’t be affected by weather hazards, believed at the time to be 50 more years or more away.

However, over the past dozen years, numerous studies have increasingly tied contemporary weather catastrophes to climate change.

For example, a study out in June from an international team of scientists attributes nearly all of the observed fivefold increase in summer wildfires in northern and central California in the past half-century to man-made climate change. Fears of wildfires appear to be one drivers of decision-making on property insurance. A report from Gallagher Re shows the threat of damaging wildfires in conjunction with inflation and pricing challenges has led to a distressed insurance and reinsurance market, particularly in California.

Those fears go beyond the wildfire peril in Western states, as property markets across the globe begin looking more like the highly difficult market in Florida as extreme weather patterns appear likely.

Fast forward a few years from the early insurer consensus on climate change, and numerous European reinsurers and insurers had established policies on investing and underwriting in the fossil fuel sector. The U.S. insurance community has slowly begun to follow suit.

Despite the sweeping change in attitudes toward climate change in recent years, Kreidler and his fellow panelists believe the industry must do more to help mitigate the impacts of climate change.

Disclosures & Investments

Rothstein echoed Kreidler’s sentiments, kicking off a discussion on the evolution of disclosures from financial world about investments and activities that help or hurt the climate change battle.

“I am in complete agreement with the commissioner that so much has been done, clearly, so much more needs to be done,” Rothstein said. “But just to put it in perspective that, as he said, climate disclosure started with a form a while ago, and it was a great start back then. Then the world has shifted more to T.C.F.D., the Task Force for Climate Related Disclosure. Thousands of companies around the world are using that. It is a basis the S.E.C. is talking about, it’s a basis for the International Sustainability Standards Board. It’s the basis of California legislation and so much more.”

Another side of the relationship between insurers and climate change is investing, another area in which panelists agreed the industry has come a long way, yet they all agreed that investing has a lot of room to grow greener. Insurers across the globe have stepped up efforts to be more environmentally mindful of where they invest their money, bolstering green funds and helping to fuel growth of renewables.

“So, five years ago, there was not an institutional investor in the U.S. that had set a net zero plan, not a single one,” Rothstein said. “Today, the investment community, and this includes some insurers, is $60 trillion of assets under management that have set net zero plans.”

He added: “It’s not fast enough, but it is clearly moving in that direction.”

According to Rothstein, Ceres plans to soon release a report, in the final phases of completion, analyzing the investment portfolios of hundreds of insurers. “And what we’ve found — again, we’re still looking at the data, so we don’t have exact numbers yet — but there is a very small concentration. Roughly half of the fossil fuel assets are owned by less than two dozen companies of those 400,” Rothstein said.


Dunn discussed the activities and initiatives undertaken by one of the world’s largest reinsurers. Swiss Re has been closely evaluating its property/casualty and life and health portfolios since 2019 through the lens of the United Nations’ 17 Sustainable Development Goals.

The UN’s 17 SDGs are call-for-action goals adopted by developed and developing nations in a global partnership. They include “No Poverty,” “Zero Hunger,” “Clean Water and Sanitation,” “Affordable and Clean Energy,” “Industry, Innovation and Infrastructure,” “Reduced Inequality,” “Sustainable Cities and Communities,” and “Climate Action.”

“And honestly, the real lynchpin is SDG17, which is partnerships, right? It’s discussions like this. It’s working with our clients,” Dunn said. “No one company, civil society or government can solve the SDGs alone, but they give us a really good breadth of perspective. So, we run all of our portfolios — again using the SDGs as a lens — and we look at how our portfolios might contribute to the SDGs, as well as how they might be related to some aspects of harm to the SDGs.”

Swiss Re then asks its portfolio owners to identify risks and opportunities, as well as concrete actions, based on that assessment.

According to Dunn, such practices have led to a change in management mindset for the underwriting community.

“I’ve seen it open up a whole new level of dialogue that they can then have with their clients,” she said. Noticeable changes are also being seen on the “net zero front,” she added.

Swiss Re’s recent research on renewables points to strong growth that insurers should be watching closely. Not just for investment opportunities, but as a source of customer growth, Dunn said.

“The world is set to add as much renewable power in the next five years as it did in the past 20,” she said. “Our Swiss Re Institute estimates that investments in green energy will generate additional energy sector-related insurance premiums of around $237 billion by 2035.”

Broken down by specific technologies, Swiss Re Institute estimates show offshore wind set to grow at 30% per year, onshore wind continuing to grow at 10% per year, while solar is expected to grow at a double-digit pace.

Direct-air capture is also grabbing investor interest. The U.S. Department of Energy is launching a five-year program to spend $3.5 billion to build four regional direct-air capture facilities, while private side investments coming in are up into the billions-of-dollars as well.

“So, if you look at the market for direct-air capture in 2021, it was a modest $2 billion,” Dunn said. “But we’re seeing companies predict really, really strong growth so that it has the potential to be about $50 billion by 2030 and even as high as $4 trillion by 2050.”

The opportunities in investing in renewables are clear, but the underwriting risks are complicated. “They don’t have a traditional history and traditional data that we like to see as the industry, right? So, we’ve launched our Centre of Competence for Renewable Energy to help our clients navigate this complex risk and support on the transition,” Dunn said.

The world is at a point at which the decision to invest in or underwrite fossil fuels versus renewables is no longer a question, but a mandate. And that mandate is coming from the market.

“Fifty-two percent of insurers will not insure new coal transactions, and it’s strictly because of the financials, because they believe, and it’s true, that it’s more expensive to get that next kilowatt from a coal plant than it is from solar today,” Rothstein said. “So, it’s not a good financial return, as well as a climate impact. So, we are moving in that direction, not fast enough. Some companies are moving a lot faster, there’re some that aren’t recognizing these risks and don’t see the opportunities … so we have to all move faster.”