Insurers are fleeing states due to climate realities, not ‘anti-woke’ bullies

hostile letter US State Attorneys General for “Anti-Awakeners” Group Targets Large Insurers Signed to Net Zero Insurance Alliance.

The alliance was established to help insurers in the area of ​​thinking about climate risk and net-zero goals. It functions much like the American Chamber of Commerce and the National Association of Manufacturers, working to develop standards and goals. The alliance was not considered controversial until Republican activists determined that anti-environmental, social and governance (ESG) and anti-climate actions could win votes and influence election results. .

For Goal Net Zero, May letter “The move to force insurers and their customers to cut emissions rapidly will not only lead to higher insurance premiums, but also higher gas prices and overall higher costs of products and services, resulting in record We’ve had catastrophic inflation and our state’s residents are in financial trouble.” The letter also attacks the alliance’s net-zero goals and warns of possible antitrust violations.

The attack seems to work.

The Net Zero Insurance Alliance started bleeding members and started making losses almost 50 percent The number of members in the last few weeks. Its chairman, the French company AXA, was released on bail. Other companies also joined the spill. Tokio Marine Holdings, Inc.Japan’s largest insurance company withdrew. Lloyd’s of Londonjumped off the ship. Spain’s mafle jumped out. Sompo in Japan did the same. Munich Re also boarded the lifeboat.

At this point, the alliance’s future looks bleak.

The Republican Attorney General won—right?

error.

What insurers were doing within the alliance, exchanges, consideration of pathways and net-zero measurements, etc., had nothing to do with US or European Union antitrust law.

Companies have responded to bullying by backing off, but they will not change their critical trajectory towards their net-zero goal. The woes of partnerships do not mean that these profit-driven, risk-focused, math- and science-driven companies will stop assessing climate risks and acting accordingly. The very existence of these companies requires careful assessment of current and future climate risks.

Republican politicians can’t change climate or the insurance risks associated with it, and businesses need to factor that into their business decisions. There are limits to threatening letters.

All insurers and reinsurers around the world are adjusting their models, canceling policies and exiting the market.

make a decision by state farm , California’s largest insurer has decided not to create new policies in the state. why? Catastrophic risks are growing too fast to be profitably insured. AIG also took the same steps. These and other risk-sensitive insurers understand that they need to stop offering insurance to ensure their profitability.

The alternative is bankruptcy.

last year in florida 6 insurance companies went bankrupt And it was unable to pay insurance claims for policyholders against repeated extreme weather disasters.a seventh After the latest hurricane, 2023 is a big crash.

The situation is dire in Louisiana, too. 8 insurance companieswent bankrupt last year.

If a homeowner has flood insurance, the cost is set as follows: just getting higher and higher . Eventually parts of the United States, Miami, Florida Keys and New Orleans, will become uninsurable.

This is reality-based economics that drives smart commercial decision-making. Bullying letters from lawyers cannot change these alarming weather facts and climate risks.

The Republican Attorney General could temporarily throw the Net Zero Insurance Alliance into chaos. But climate facts and sound business decisions cannot be avoided.

California’s extreme weather is getting worse, not better.

Hurricanes that hit Florida, Louisiana, Texas and more today more serious than in the past. The costs borne by the insured and the uninsured will continue to rise.

As the ocean warms and seal levels rise, the cost jumps. Recent research Depending on whether the green transition is optimal, costs are estimated to range from $120 billion to $500 billion this century.

There is no prospect of that changing for the better. Our future holds hotter, windier, wetter, drier and more destructive summers.

For example, new studyA multi-day heat wave blackout could hit Phoenix, Arizona, predicting half the city could be sent to the emergency room. Thousands may die. The social and economic costs of such a tragedy would be immense.This dire prediction mirrors the terrifying beginning of the book “Future Ministry””

If state attorneys general really care about the future of their voters and want to ensure better economic prospects and outcomes, they should sue the worst greenhouse gas polluters: the companies and people who make things worse and worse. should start. State attorneys general should pursue strict net-zero targets in their states instead of nagging insurance companies. Changing local rules and regulations, tightening building codes, reducing greenhouse gas emissions at the local and city level, changing incentives and jeopardizing tomorrow’s livelihoods for freeloaders and today’s money Those who expose need to be punished.

Will Republican state attorneys general shift focus and start addressing climate risks directly? Maybe not today, but definitely sometime soon. Voters demand as much as climate change risks grow, and the stupidity of insurance companies who understand what a greenhouse future looks like and what must be done about it. will overtake any pursuit.

Stuart Mackintosh author “The economics of the climate crisis” as a managing director. G30.