Saturday, August 03, 2019

Making the fossil fuel insurance market less perfect

Timely as ever, I thought I'd immediately jump on to the news that a month ago the first big American insurance company, Chubb, announced it's no longer insuring coal company operations. The big European insurers have already dropped out, and the pressure's on now for the other big American insurers.

I go back and forth about whether climate divestment can have a direct economic effect on fossil fuel companies. The billions of dollars in financing that's not screened off, and the thousands of investors willing to make investments, argue that it'll be a while before divestment directly harms the market for stocks and bonds from fossil fuel companies. The knock-on effects from making fossil fuel businesses disreputable, OTOH, are profound. There aren't that many insurance companies capable of insuring multi-million dollar operations.

So yes there are a still a handful of insurers happy to help pollute the planet, but a handful is far from a perfect market of buyers. Coal companies are going to have to pay an additional premium to get insured because fewer insurers want to play with them, and that's very much a good thing. The climate divestment push is helping make this happen.

Other knock-on effects from divestment include decreased willingness of big financial institutions to make loans, and simply the increased stigma of being a fossil fuel company driving up their costs and reducing willingness to do business with them. The real game though is political - the relative costs of fossil fuels and low-carbon alternatives are only part of the decisionmaking, with the rest being political. Climate divestment helps show the weakening political power of fossil fuels, which then makes it easier to knock them down.

We'll see what other American insurers are going to do. Meanwhile it's unfortunate that these insurers will make an extra profit out of being the bad guys. I hope some stigma moves over to AIG, Travelers, and Berkshire Hathaway to balance that out.

11 comments:

Jan Galkowski said...

... And pressure on your local insurer to stop does help. People can threaten to move their own insurances elsewhere.

The only amazing about the Liberty Mutual case is how and why they thought the Boston market would either not notice or not act.

Barton Paul Levenson said...

intertronix,

We are regular to thank with your support our blog also English excellent.

shahbaz said...
This comment has been removed by a blog administrator.
shahbaz said...
This comment has been removed by a blog administrator.
shahbaz said...

a very good article for me to read as a growing travel entrepreneur. introduce me tjandra limanjaya, it's very difficult to understand business. when I read this article I called enlightenment for me. Thank you very much my friend.
link alternatif Bandarapoker

shahbaz said...
This comment has been removed by a blog administrator.
shahbaz said...
This comment has been removed by a blog administrator.
OpioidClinicsinjohnsonCityTN said...

An impressive share! I've just forwarded this onto a friend who has been doing a little research on this. And he actually bought me dinner because I found it for him... lol. So let me reword this.... Thank YOU for the meal!! But yeah, thanx for spending some time to talk about this topic here on your web page.Life Insurance

imran said...

Hello, I think it was ‘secret’ in the sense that most of Sarah’s family didn’t know that she had gotten married and she got married earlier than planned so she could get the benefits. Not so much illegal as maybe a little dicey from family’s perspective?Cumbria

OpioidClinicsinjohnsonCityTN said...

Interesting information, however I have no choice in my Medicare supplement since it is provided by my deceased husbands former employer as a benefit.rollover

OpioidClinicsinjohnsonCityTN said...

to the questions posted by the reader; otherwise they may not come back to comment next time.trackbacks and pingbacks are useful tools for promoting your views outside the original blog. when fellow bloggers link you; the link to their blog post.insurance