Commissioner Jones asks insurers to cut their investments in the coal industry
California Insurance Commissioner Dave Jones has issued a call to the insurance industry, encouraging companies to divest from the coal industry. Commissioner Jones is working to require insurers to disclose their investments in coal companies as well. The use of coal among utilities has fallen sharply over the past few years due to federal emissions regulations, but coal companies still receive strong financial support from both the public and private sectors. By divesting from coal, the insurance industry may aid in the fight against climate change.
Demand for coal is falling rapidly in the US
According to the Energy Information Administration, coal only accounts for 35% of the United States’ energy production. Demand for coal has been falling from what it had once been, especially as the country begins to focus more heavily on renewable energy. Falling demand has lead to some coal companies filing for bankruptcy protection. This presents a financial risk for the insurance industry, according to Commissioner Jones, and divesting from the coal industry may help protect insurers in the future.
Insurers want to remain in control of their investments
The call for divestment in coal is not being ignored by the insurance industry. The Association of California Insurance Companies has said that its members are reviewing the request from Jones currently. The organization notes that the 363 property/casualty insurers that it represents only invest in low-risk holdings, which can be easily liquidated. This mitigates the financial risks that they face. The Association of California Insurance Companies notes that insurers want to retain their ability to manage their investments in order to have better control over insurance premiums, preventing them from skyrocketing.
Divestment in coal could cause a shift in support for renewable energy
Jones is the first insurance commissioner in the United States to request the insurance industry to divest from coal. California is considered the largest insurance market in the country and the sixth-largest in the world, with the insurance industry collecting some $259 billion in premiums every year. Divestment could deal a greivous blow against the coal industry and more insurers may opt to shift their support to renewable energy companies that show promise.