Climate change challenges getting the best of most insurance companies
A recent report showed that the majority of insurers are not keeping up with the trends when making investment decisions.
When it comes to the climate change challenges faced by insurance companies, many are not being met. In fact, a recent study said 90 percent of insurers are failing in this important area. Insurance companies aren’t considering climate change when they decide on investments, said the report.
This information was presented by the Asset Owners Disclosure Project in a report they published.
The Asset Owners Disclosure Project conducted the research. The research comprised an analysis of 116 insurance companies. Together, they had $15.3 trillion in investments. The results were included in the project’s annual Global Climate 500 Index. The Index rated the insurance companies with grades from AAA to D. The insurers received an X if they did not show any indication of action.
Despite the fact that climate change challenges were reflected in the offerings insurance companies made to their clients, very few were protecting themselves Only one in eight – that is, 12 percent – were determined to be taking “tangible action” in investment portfolio protection when it comes to climate change risks.
In fact, the climate change challenges may have an even more profound impact on the investments than that.
Only 1 percent of insurance companies are conducting assessments of emerging stranded asset risks. Those involve carbon assets that may become “stranded” as a result of potential future regulations. For example, it is expected that climate change will lead to fossil fuel and renewable energy regulations. Next to none of the insurers had taken real action to mitigate the risk of that possibility.
Among all the companies, 48 were assigned an X rating. They were given “laggard” labels. Those insurers represented $4.2 trillion in managed assets. Among them 10 of the companies were in control of half the total managed assets.
Among the companies in the United States that were deemed to have been laggards by the AODP were New York Life Insurance and Mass Mutual Life Insurance. Between those insurers doing nothing to protect themselves against risks from climate change challenges on investments were $230 billion in assets under management at New York Life and $139 billion from Mass Mutual.