AIG to Halt Underwriting, Investing in Coal
Just as we see the world’s democracies putting overt pressure on Russia in recent days with a range of sanctions over their unconscionable war against their neighbors, the Ukraine private industry can and should play a role in bringing mankind’s fossil fuel era to an end. That’s why today’s story about American International Group (AIG) ceasing to write (underwrite) and invest in businesses that obtain more than 30% of their revenue from coal or oil sands is good news. AIG is also fully embracing renewable energy for its own business by 2030 if not sooner.
AIG is America’s largest commercial insurer and what they do (whether the coverage they write, premiums they charge, or the business risks that they are willing to insure) has a sizable impact in the overall insurance industry in the U.S. and around the world. And although it would have been nice to have seen AIG make this decision sooner (today’s news follows the leadership that their competitors, large brands including ACE/Chubb, Hartford, and The Traveler had previously made in recent years), it’s still a positive step in what will be a long, world-wide term transition from antiquated fossil fuels to clean, sustainable energy solutions.
Now before you believe that AIG’s decision is altruistic, consider that their thesis for this decision is based on science, climate science to be exact, and economics. The world’s changing weather, including increasingly more frequent and violent events such as hurricanes and flooding, are driven, as AIG has come to conclude, by our climate change crisis. And that comes at a cost of some $50,000,000 per year to their company.
Rather than continuing to make matters worse for their own profits and investors, they have effectively decided to reduce or exit support of polluting industries that are largely the cause of the climate crisis and have been increasingly eroding their own bottom lines. Profit is their motivation, which is fine, but the cause of their concern and this shift in their business is, to be clear, our warming planet.
Here’s what AIG’s Chairman said when releasing this news;
“We’ve seen catastrophe levels that are 10 times the level the portfolio dealt with in the prior 10 years for losses in excess of $50 million.”
Peter Zaffino, CEO & Chairman, American International Group (AIG)
You can read all about the details in the following article from Erin Ayers and Advisen: www.advisen.com.
To learn more about this and what other insurers are doing check out the Insure Our Future site here: insureourfuture.co.