In recent years insurers have faced up to climate campaigners with an uncomfortable regularity. Be it through reports and research, or in-person and virtual rallies, the climate issue and just what fossil fuels insurers will cover has been kept very much under scrutiny.
But while carriers and their investment and underwriting strategies have typically been the target of activists, brokers have also, at times, faced the spotlight.
Insurance brokers should be “following the lead” of insurers that have made steps to pull out of fossil fuel cover, whether through pledging not to broker cover for new fossil fuel projects or ruling out specific ventures such as the East African Crude Oil Pipeline (EACOP) or the Trans Mountain Pipeline, according to The Sunrise Project finance programme director Peter Bosshard.
“Insurance brokers play a critical role in the global economy, helping businesses and households find affordable insurance cover,” Bosshard said.
“Like any other actors in society, they have a moral responsibility to avoid further climate disasters and stop fueling unmanageable climate breakdown.”
Insurers and brokers may be familiar with Bosshard’s work on the Insure Our Future project, which gives carriers a scorecard based on factors such as cover offered for fossil fuels, divestments, and other climate leadership.
Brokers too have a “narrow self-interest to avoid being branded as climate deniers and the fossil fuel industry’s last good friend,” Bosshard said.
Last month, the Bureau of Investigative Journalism (BIJ) reported that Marsh had secured the contract to arrange cover for EACOP, a controversial project backed by the TotalEnergies, a French oil giant, and the China National Offshore Oil Corporation.
Marsh received more than 100 letters from its own staff members calling for the broker not to work on the project, the BIJ said.
When approached by Insurance Business, Marsh said it had a long-standing policy of not naming clients, and said it was committed to helping firms develop low-carbon business models.
“They risk losing their credibility as a source of impartial advice if they position themselves as partners of some of the worst fossil fuel projects on the planet.”
Bosshard has also previously levelled criticism at Marsh’s competing broking giant Aon – in 2019 he said the broker was indulging in “hypocrisy” for advertising its ability to close gaps where insurers had pulled, or were likely to pull, cover for the coal sector.
A webpage that allegedly made such pledges has since been pulled by the global broker, though news articles written at the time, including comments from Aon staff members, remain.
“We will be working to identify what insurances may be withdrawn and put actionable plans in place to close those gaps in cover,” Paul Pryor, Aon’s global mining practice leader, told South African financial advisor title FANews in 2019.
Brokers have a “moral responsibility” to their customers to act on climate change, Bosshard said.
“Brokers argue that their first responsibility is to their customers, but fossil fuel companies only make up a tiny slice of their clientele,” he said.
“As climate change spirals out of control, a growing number of businesses and households will no longer be able to access insurance, and brokers need to keep these long-term interests of their customers in mind.”