As political debates over climate policies heat up in the US and UK, some of the largest insurance companies are sticking to their climate strategies. This commitment comes even as environmental groups take legal action against the Trump administration, claiming it is trying to undermine climate science.
Dame Amanda Blanc, the CEO of Aviva, emphasized that the company’s climate plans are crucial not just for environmental goals but also for addressing the financial risks linked to extreme weather events. She noted the rising costs from climate-related disasters, including floods in the UK and wildfires in Canada. Aviva recently reported a 22% increase in its operating profit to £1 billion, largely due to higher insurance premiums in the UK and Ireland. This positive news helped boost Aviva’s shares to a level not seen since before the 2008 financial crisis.
While some financial institutions have pulled back on their climate commitments, leaders in the insurance sector argue that adapting to climate change is essential for profitability. Beverly Adams from Marsh highlighted that many clients are investing in climate resilience measures, such as flood defenses, and want these efforts recognized in their insurance policies. She believes the London market is well-equipped to lead in this area due to its innovative history and strong ties to government policy.
Allianz is taking a similar stance, integrating climate strategy into its growth plans. Emilia Macarie, the company’s chief sustainability officer, pointed out that 2024 was a challenging year due to severe natural disasters, making it one of the most expensive years for insurers worldwide. Despite these challenges, Allianz remains committed to its sustainability goals, focusing on innovative solutions and adaptation measures for its clients.
This determination contrasts sharply with several major banks that have recently exited the UN-backed Net-Zero Banking Alliance, including JPMorgan, Citigroup, and Goldman Sachs. Such withdrawals reflect a broader trend of uncertainty in the financial sector regarding climate commitments.
In the US, the political landscape is adding to the uncertainty. Tanya Andolsen, president of Argosy Risk Specialists, noted that the shift from one administration to another has complicated pricing and risk assessment for environmental coverage. Different political views can create confusion about potential liabilities, making it harder for insurers to set clear guidelines.
This political tension is now being challenged in the courts. The Environmental Defense Fund and the Union of Concerned Scientists have filed a lawsuit against the Trump administration, accusing it of trying to undermine climate science through a questionable report from the Department of Energy. This report raised doubts about the reliability of climate models and downplayed the economic impact of carbon dioxide-driven warming.
As the insurance industry grapples with these issues, the focus remains on not just assessing risk but also on valuing resilience. A senior broker from the London market put it simply: “Politics can change every four years. The climate doesn’t wait.”