Time for real criminals to pay for climate change as insurance becomes “unsustainable”

Extreme weather events are causing rising costs around the world, with insurance companies and governments struggling to manage the financial impact, so a campaigner says it's time the real culprits pay.

According to Ian Duff, head of Greenpeace International's Stop Drilling Start Paying campaign, the increasing frequency and intensity of such events – driven by climate change – are making traditional insurance policies increasingly unsustainable.

In fact, a study by the World Economic Forum warns that by 2050, climate change could cause an additional 12.5 trillion dollars in global economic losses.

In an opinion piece published by Context, Duff asked: “The important question is: who is paying for all this?” Historically, the insurance industry provided the answer by allowing communities to transfer and spread the risk of such disasters. However, the increase in violent weather events has made it more challenging for insurers to maintain this role.

Duff pointed out that in France, insurance premiums are rising to unacceptable levels, prompting government intervention. In Germany, only half of residential buildings are adequately insured, with regions such as Bavaria facing the worst figures.

Insurance costs for Texas homeowners are expected to rise as a result of Hurricane Beryl, while parts of California, Florida, and Louisiana have become completely uninsurable due to increased wildfire and hurricane risks.

This trend is particularly prominent in countries of the Global South, where access to insurance is limited. Duff highlighted the growing insurance gap as a critical issue, with the industry, regulators, and international organizations such as the United Nations grappling with how to address it.

“The insurance model is shaky,” Duff said, adding that alternatives must prioritize sustainability and affordability over profit. He believes that one possible solution is to make those responsible for climate change accountable for the costs.

“Without human-caused climate change, extreme weather events would not be more frequent and more intense,” Duff asserted, pointing specifically to the fossil fuel industry as a major cause.

He lamented that oil and gas companies, some of the polluters of the world, have known for a long time about the impact of climate change but they continue to extract fuel, interfere with the functioning of the climate, and profit from the destruction of the environment.

Duff is encouraging insurers to change their strategy by holding oil and gas companies liable for losses incurred, in the same way the insurance industry previously took action against tobacco companies for fraudulent practices.

Additionally, a recent study found that governments could raise $900 billion by 2030 by taxing fossil fuel companies in the world's richest economies.

“Forcing oil and gas companies to pay for losses and damages will address the insurance gap visibly and unfairly,” Duff argued. This approach will help keep insurance affordable for all while ensuring that those who benefit from polluting bear the costs.

Duff believes that the fossil fuel industry's accountability may make it a less attractive investment, thus contributing to its deregulation.

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