This week, insurers and reinsurers who are members of the Net-Zero Insurance Alliance (NZIA), received a letter from 23 attorneys general raising potential legal concerns that might arise from their required commitment to collaborate with other insurers to advance an “activist climate agenda.”

The NZIA was launched in 2021 at the G20 Climate Summit. NZIA members committed to transition their underwriting portfolios to net-zero greenhouse gas (GHG) emissions by 2050. Current members include Swiss Re, Allianz and AXA.

The letter from the AGs requests documentation and responses to several questions related to potential legal concerns.

That correspondence follows previous letters the group of Republicans sent to asset and financial members of the climate group. They consider the environmental, social and governance (ESG) movement unlawful activism and agenda that will be pushed onto insurance consumers.

Concern centers on federal and state antitrust laws prohibiting insurers from altering contract terms for reasons not reasonably related to the risk or expense of providing the insurance.

According to global business law firm Arnold & Porter Kaye Scholer LLP, companies may increase antitrust risks through their climate-driven initiatives by not managing benchmarking goals, supply chains and vendors appropriately, and by engaging in questionable collaboration with competitors.

Utah Attorney General Sean D. Reyes, along with Louisiana Attorney General Jeff Landry, who are spearheading the efforts, are specifically concerned with the requirements set forth in NZIA’s first “Target-Setting Protocol.” The attorneys general note that while NZIA indicates the protocol is non-binding, it goes on to provide explicit instructions and requirements, some of which must be completed by set-upon deadlines.

They explain that their concerns stem from the potential detrimental effect the collaboration among insurers, in their quest to advance climate agenda, could bring forth to residents of their states.

“The push to force insurance companies and their clients to rapidly reduce their emissions has led not only to increased insurance costs but also to high gas prices and higher costs for products and services across the board, resulting in record-breaking inflation and financial hardships for the residents of our states.”

Outlining federal antitrust laws, the legal regulators advise “that certain arrangements among business competitors are strictly forbidden because they are unfair or unreasonably harmful to competition” and could be considered an illegal boycott, if certain businesses are intentionally targeted because they haven’t complied with carbon reduction efforts.

An agreement to fix prices would also be considered illegal, as would placing conditions on the terms of the insurance contract, and could lead to a significant increase in prices and possibly to inflation.

They cite additional problematic NZIA “targets” because “they limit the identity of your customers and the scope of your overall business.”

They state the “insuring the transition” target may be an illegal restraint of trade because it places limitations on the scope of your business by forcing your companies to increase the proportion of your business that covers certain “climate solutions.”

This is problematic, according to the letter, because it could lead to insurers pushing a product where there’s no demand for it while moving focus away from products that are actually needed by the market.

“The ESG movement has spread to every corner of the world’s financial and energy sectors, and unsuspecting Americans are paying the price,” stated Utah Attorney General Reyes. “Insurers have an obligation to protect the interests of their clients, not to advance a radical environmental agenda.”

Noting apparent antitrust concerns, Munich Re, a founding member of NZIA, announced it discontinued its membership in the climate alliance in late March 2023.

“In our view, the opportunities to pursue decarbonization goals in a collective approach among insurers worldwide without exposing ourselves to material antitrust risks are so limited that it is more effective to pursue our climate ambition to reduce global warming individually,” says Joachim Wenning, CEO of Munich Re.

Hannover Re and Zurich also left the coalition earlier this year.

Industry associations and NZIA member insurers contacted declined to comment on the letter from the AGs.