Ian Duff, head of Greenpeace International’s Stop Drilling Start Paying campaign, has highlighted a growing crisis within the insurance industry due to the escalating impacts of climate change. As extreme weather events become more frequent and severe, traditional insurance models are increasingly becoming untenable.
According to a recent analysis by the World Economic Forum, climate change could result in an additional $12.5 trillion in global economic losses by 2050. Duff, writing in Context, questions who will bear the financial burden of these catastrophic events. Historically, insurance companies have helped societies manage and distribute risk. However, the surge in severe weather has made it increasingly difficult for insurers to sustain this role.
In France, the rising cost of insurance premiums has led to government intervention, while in Germany, only half of residential properties are adequately insured, with regions like Bavaria facing even more alarming figures. In the United States, particularly in Texas, insurance costs for homeowners are expected to rise following Hurricane Beryl. Meanwhile, properties in wildfire and hurricane-prone areas of California, Florida, and Louisiana are becoming uninsurable.
This issue is exacerbated in Global South countries, where insurance coverage is already sparse. Duff emphasized the widening insurance gap as a critical concern, with industry stakeholders, regulators, and international bodies like the United Nations struggling to find solutions.
Duff argues that the current insurance model is failing and advocates for a shift towards resilience and affordability rather than profit. He proposes that those responsible for climate change, particularly fossil fuel companies, should be held accountable for the resulting financial damages.
“Extreme weather events would be significantly less frequent and severe without human-induced climate change,” Duff noted, attributing much of the blame to the fossil fuel industry. He criticized oil and gas companies for their continued extraction of fossil fuels and their obstruction of climate action despite being aware of the climate impacts.
Duff is pushing for a reformed approach where insurers hold fossil fuel companies responsible for losses, akin to the insurance industry’s past actions against tobacco companies for deceptive practices. He also pointed to a recent study suggesting that taxing fossil fuel companies in wealthy economies could generate up to $900 billion by 2030.
“Making oil and gas companies pay for loss and damage is a practical and fair way to address the insurance gap,” Duff argued. This approach could ensure more affordable insurance while holding polluters accountable. Additionally, he believes that increasing the financial liability of the fossil fuel industry could reduce its attractiveness as an investment, aiding in its gradual decline.
