Commissioner Jones undeterred by oil and coal state threats of lawsuits challenging his requirement that insurers disclose climate risks
News: 2017 Press Release
SACRAMENTO, Calif. — "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."
Media note: Link to the Commissioner's Climate Risk Initiative and Data Call Results: http://www.insurance.ca.gov/0250-insurers/0300-insurers/0100-applications/ci/index.cfm
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.