An insurer group is unhappy with new legislation to require insurance companies operating in California to disclose investments in fossil fuel-related entities as well as the fossil fuel-related companies and projects being underwritten.
Assembly Bill 1694 expands upon the disclosures requested by former Insurance Commissioner Dave Jones in 2016 to cover all underwriting of, and investment in, fossil fuel-related projects by all of the 1,500 insurance companies that do business in California.
California Assemblyman Marc Levine (D-Marin County) on Tuesday introduced the bill, calling for transparency from the insurance industry.
The American Property Casualty Insurers Association called AB 1694 “unnecessary and potentially dangerous.”
“This bill gives broad authority to the California Department of Insurance to prevent an insurer from investing in or insuring a fossil fuel-related entity or project,” said Denni Ritter, APCIA assistant vice president for state government relations. “This is unsound public policy that will have wide ranging consequences for the entire California economy. Counter to its stated goal, this bill could needlessly jeopardize funding for important projects working to develop alternatives to fossil fuel, by limiting investment and insurance for local utilities. This bill could force necessary businesses, like gas stations or power plants, to go without insurance, putting the public and our state’s economic recovery at risk.”
He said the other provisions of the bill “are duplicative,” requiring insurers to annually disclose fossil fuel-related investments and underwriting, which the industry already does.
Insurers in California and six other states each year complete the Insurer Climate Risk Disclosure Survey, which was adopted by National Association of Insurance Commissioners in 2010.
“Insurers confront climate change in the normal course of their business and are experts in understanding and measuring weather and climate-related risk,” Ritter said. “Each insurer incorporates its own strategy in managing their investment portfolio.”
Levine in introducing the bill called for being “aggressive in the face of the climate crisis.”
“Insurance companies want to raise rates due to climate risk, yet are investing and underwriting the fossil fuel industry – the very industry that exacerbates climate change,” he said. “If we are serious about fighting the climate crisis, we need transparency from the insurance industry created by AB 1694.”
AB 1694 is set to be considered by the State Assembly this Spring.
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