The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $288 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $394 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov.
SACRAMENTO, Calif. June 20, 2017 “While politicians in coal, gas, and oil states continue to deny the existence of climate change, California has concluded based on overwhelming scientific evidence that climate change is real. The threats of lawsuits by 12 red state attorneys general and one governor are not going to stop me from doing my job as insurance commissioner to make sure that insurance companies are recognizing potential financial risks associated with climate change.
As the chief insurance regulator in California – the largest insurance market in the United States-it is my job to make sure insurance companies evaluate and address potential risks to their investment portfolio, to ensure they are investing in assets that retain value so those assets are available to pay future claims. Climate change poses a potential financial risk to insurance company investments in coal, oil, gas, and utilities that rely on carbon to generate electricity.
The shift away from fossil fuels and toward renewable energy sources is a growing phenomenon that started years ago, based on decreasing prices for renewable energy sources and regulatory and policy changes at the local, state, national, and international levels investments in oil, gas, and coal, and utilities that rely on oil, gas, and coal run the risk of becoming “stranded assets” on the books of insurance companies with significantly reduced or no value.
The bankruptcy of over 35 coal companies and the refusal of four major United States banks to provide loans for new coal infrastructure, the announcement by Deutsche Bank – the largest international coal infrastructure lender – that it will not make new coal infrastructure loans, the decision of major international insurers to stop investing in coal, the decline in price of energy alternatives to coal, and the imposition of clean air regulations, are just some of the indicators that coal is or runs the risk of being a “stranded asset.”
For this reason, I asked the insurance companies I regulate to voluntarily divest from coal. I also asked insurers to publicly disclose their investments in coal, oil, gas, and utilities so insurers, regulators, shareholders, and consumers have better insight into these investments and the risks they face due to climate change.
For those climate denying politicians of red states who threaten to sue me, I will happily defend my obligation as California’s Insurance Commissioner to make sure insurers are addressing climate change related risks and to protect California consumers.”