Insurance and Climate Change column

How One County Plans to Vet Insurers for Fossil Fuel Investments

By | February 20, 2020

“We have front row seats,” said Elise Jones, a Boulder County commissioner.

Jones along with two other commissioners oversees government affairs in the Colorado county of 330,000 or so at the base of the foothills of the Rocky Mountains.

Her statement wasn’t to brag about a night out at the opera or great tickets to a Nuggets game.

Jones isn’t one to hold back when expressing her fears over climate change and what she believes it’s doing to her county.

She and fellow commissioners Matt Jones and Deb Gardner – commissioners are elected by the voters of Boulder County to serve four-year terms and represent the county as a whole – last week called on insurance companies to stop insuring and investing in fossil fuels.

Specifically, the commissioners passed a resolution to screen potential county insurance providers for those that support fossil fuels without phaseout plans.

Boulder County follows lead of council members in Paris, who in 2018 adopted similar a resolution.

Later the same year, the San Francisco Board of Supervisors became what is believed to be the first U.S. municipal body to try to force insurance companies to stop insuring and investing in fossil fuels when the board voted unanimously in favor of a resolution to urge the city to screen insurers for their investments in coal and tar sands.

Since 2015, an estimated 19 global insurers have adopted policies to limit or end their insurance for coal, and nearly 30 insurers have announced plans to divest from coal assets.

Some of this may be a result of growing public pressure from activist groups, such as the Sunrise Project, which has vowed to step up pressure on the insurance industry to stop investing in or insuring the fossil fuel industry and fossil fuel projects around the world.

There’s now a long and growing list of large insurers and reinsurers who have adopted policies regarding fossil fuel investments and underwriting:

AXA XL no longer offers construction coverage for new coal plant sand new coal mines; Zurich no longer provides insurance or risk management services for new thermal coal mines or plants; Allianz no longer offers single-site/stand-alone insurance coverages related to the construction and operation of lignite/coal-fired power plants; Swiss Re will not provide any new direct reinsurance services for new construction projects for new thermal coal mines and power plants; Munich Re will no longer insure any new constructions of coal-fired power plants or coal mines as single risks in developed countries or in the majority of emerging markets.

One of the activist groups backing and applauding the Boulder County resolution was 350.org, an international environmental organization addressing the climate crisis.

“This is a great step forward – it demonstrates to the financial industry that important customers are becoming uneasy with its inertia, and beginning to demand that the industry face its role in causing, and hopefully solving, the climate crisis,” Bill McKibben, a founder of 350.org, said following passage of the resolution.

From 350.org’s perspective, insurance companies investing premiums in fossil fuel companies make “dirty energy” infrastructure projects possible by providing insurance to build and operate them.

The 40 largest U.S. insurers hold combined investments of over $450 billion in coal, oil, gas, and electric utilities, according to the group.

The American Property Casualty Insurance Association, the largest trade group representing insurers, and the Rocky Mountain Insurance Information Association, which represents insurers in the area, including in Colorado, have been reached out to for responses to the Boulder County resolution.

That such a resolution passed in Boulder shouldn’t be too surprising. Clean energy is big in the county.

Cleantech job concentration in Boulder County is four times the U.S. average, according to the annual Colorado Business Outlook 2020.

There are more than 350 cleantech companies in the county employing about 4,800 people working on renewable energy, energy efficiency and energy research, the report from the Leeds School of Business shows.

It’s also not surprising that Jones is one of those who took the lead on pushing through the resolution.

She’s lived in Boulder County for more than 20 years, where she has been an outspoken environmental advocate.

Prior to her post as a county commissioner, Jones was executive director for the Colorado Environmental Coalition for 13 years. She has also worked as a regional director for the League of Conservation Voters, and was a project coordinator for the National Wildlife Federation. Jones last year was appointed by the governor to serve on the Colorado Air Quality Control Commission.

“We are in the middle of the country, so instead of sea level rise, what we get with a changing climate is increased droughts, more frequent and more intense wildfires, and more significant heatwaves and extreme weather events that come in the form or yearly violent storms and flooding events,” Jones said.

She specifically called out the Four Mile Canyon Fire in 2010, which burned in the Rocky Mountain Front Range adjacent to Boulder, destroying 168 homes with insured losses reaching an estimated $217 million, making it the most expensive wildfire in state history.

Then in 2013 flooding spread across nearly 200 miles of the state, impacting 17 counties and prompting Gov. John Hickenlooper to make a disaster declaration, Jones noted.

“Over six years later we are still rebuilding some of our roads from that flood,” Jones said. “We know how impactful climate change is and how expensive it is in terms of human impact and financial impact.”

Jones said the details of the resolution are still being worked out. Just how much fossil fuel investments would disqualify a carrier from being able to do business with the county, for instance, has yet to be determined.

“We want disclosure so that we can work with companies that have the least amount as possible,” Jones said.

Jones would prefer that insurers have no fossil fuel investments before being able to sell the county a policy.

“We don’t know yet how many insurance companies that are out there who can serve our needs and have zero fossil fuel investments,” Jones said. “I think this is the next frontier in terms of divestment and putting your money where your values are and it makes no sense to have our tax dollars going to something that has such a negative impact on our community and the planet.”

As impacts go, the resolution may not have a big one, but the intent, Jones said, is to make statement.

Aside from dental and health insurance, the county’s insurance spend on coverages like workers’ compensation and general liability, is roughly $1 million per year, according to Jones.

The law requires the county to issue a request for proposals every few years for insurance coverage. The county, which does business directly with insurance companies, plans to make the requirements effective for the next RFP cycle.

“The main thing that we wanted to do with this is send a signal to the insurance industry that this is coming and we want to be a leader, and let others who follow know, that we want to ensure that insurance companies are not investing to the detriment of the people they are supposedly serving,” Jones said.

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