The escalating financial burden of extreme weather events is straining insurance companies and governments worldwide, prompting calls for the fossil fuel industry to be held accountable for its role in climate change. Ian Duff, head of Greenpeace International’s Stop Drilling Start Paying campaign, argues that the increasing frequency and severity of these events are undermining traditional insurance models.
According to Duff, the World Economic Forum has projected that climate change could lead to an additional $12.5 trillion in global economic losses by 2050. Duff, in an opinion piece for Context, questioned who should bear these costs. Traditionally, insurance has helped societies manage and distribute the risks associated with natural disasters. However, the rising incidence of severe weather has made it increasingly difficult for insurers to fulfill this role effectively.
Duff highlighted specific examples of the strain on insurance systems: In France, insurance premiums have surged to unsustainable levels, leading to government intervention. In Germany, only half of residential buildings are sufficiently insured, with even worse coverage in regions like Bavaria. In the U.S., Hurricane Beryl is expected to drive up insurance costs for homeowners in Texas, while properties in high-risk areas of California, Florida, and Louisiana have become uninsurable due to increasing wildfire and hurricane risks.
The situation is even more dire in Global South countries, where insurance access is already limited. Duff stressed that the growing insurance gap is a pressing issue, with the insurance industry, regulators, and international organizations like the United Nations struggling to find solutions.
Duff criticized the current insurance model, arguing it is failing and needs to shift towards prioritizing resilience and affordability over profits. He proposed that one way to address this crisis is by making those responsible for climate change, particularly fossil fuel companies, pay for the resulting damages.
Duff accused oil and gas companies, some of the largest polluters, of having long been aware of climate change impacts while continuing to extract fossil fuels and obstruct climate action. He suggested that insurers should follow a precedent similar to actions taken against tobacco companies for deceptive practices by holding fossil fuel companies liable for climate-related losses.
Moreover, a recent study indicates that taxing fossil fuel companies in the world’s wealthiest economies could generate $900 billion by 2030. Duff argued that requiring oil and gas companies to cover the costs of climate-induced damage would address the insurance gap in a practical and equitable manner, ensuring affordable coverage for all while making pollution-prone industries less attractive as investments.