California Insurance Commissioner Dave Jones on Monday asked all insurance companies doing business in California to voluntarily divest from their investments in thermal coal as part of a nationwide call to reduce carbon emissions to do battle with climate change.
To comply with this request would mean making no new investments, not renewing existing investments and selling or withdrawing from existing investments in thermal coal, according to the California Department of Insurance.
Commissioner Jones also announced that in April he will initiate a data call that requires insurance companies to disclose annually their carbon-based investments including those in oil, gas and coal.
These required financial disclosures will be made public and will be used by the CDI to assess the degree of financial risk posed to insurance companies by their investments in the carbon-based economy.
“Today I ask insurance companies doing business in California to voluntarily divest from investments they hold in thermal coal,” Jones said in a statement. “I am also announcing that insurance companies doing business in California will be asked to provide to the Department of Insurance detailed and specific financial disclosures of their investments in the carbon economy including coal, oil and gas. We will make this new information public so that investors, policyholders, regulators and the general public can know the extent to which insurance companies are invested in the carbon economy.”
Jones said his decision to ask insurance companies to divest from thermal coal and to require insurance companies to disclose investments in “the carbon economy” arises from his responsibility to make sure insurance companies address potential financial risks in the reserves they hold to pay future claims.
“The movement away from coal and the rest of the carbon economy poses a potential financial risk to insurance companies investing in coal and the carbon economy,” Jones said. “The potential risk of continuing such investments is that they lose value over time or that they lose value quickly. In either case, such investments pose a potential financial risk to those who invest in them.”
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