Insurers have come a long way on climate change, but they have a long way to get where we 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.

Mike Kreidler
Mike Kreidler

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 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 or more years away.

Steven Rothstein

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

For example, a study out in mid-June from an international team of scientists shows that nearly all of the observed fivefold increase in summer wildfires in northern and central California in the past half-century is attributable to man-made climate change.

Fear of wildfires appears to be one driver of decision-making on property insurance. A new 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.

Samantha Dunn

Despite the sweeping change in attitudes toward climate change in recent years, Kreidler and his fellow panelists believe the industry can take many more steps 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 the 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 TCFD, the Task Force for Climate Related Disclosure. Thousands of companies around the world are using that. It is a basis the SEC 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. It’s another area in which panelists agreed the industry has come a long way, yet they all agreed that insurer 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. And there are some insurers that are clearly doing that.”

According to Rothstein, Ceres over the summer plans to release a report, which is 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. “So, there is a very high concentration with a small number of companies.”


Dunn discussed the activities and initiatives being 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 SDG’s 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 all of its portfolio owners to identify three risks and three opportunities, as well as three concrete actions, based on that assessment.

According to Dunn, such practices have led to a change in management mindset for most of 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 a potential 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 roughly 30 percent per year, onshore wind continuing to grow at 10 percent per year, while solar is expected 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; however, 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. “It’s a difficult thing, but there’s a lot of opportunity there.”

The world is now at a point at which the decision to invest in or underwrite fossil fuels vs. renewables is no longer a question but a mandate. And that mandate is coming not so much from regulators as it is 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, [but] 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.”

To watch the “Sustaining Sustainability: How the Insurance Universe Deals with Evolving Risks and Dispositions” webinar on demand, visit the Insurance Journal Research section.

This article was originally published by Insurance Journal. Reporter and panel moderator Don Jergler is the West Coast editor of Insurance Journal.