Insurance Australia Group (IAG) has been urged to set targets to reduce its investment in coal, oil, and gas, in line with the Paris Agreement’s goal of limiting global warming to 1.5 degrees.
The call was made by environmental finance group Market Forces on behalf of more than 100 IAG shareholders, as evidence of global warming impacts on IAG can be found in its increased provisioning for natural perils.
“IAG is the only major insurance company in Australia with no timetable for ending its thermal coal investments,” said Pablo Brait, Market Forces campaigner. “IAG’s shareholders and customers are feeling the financial impacts of the climate crisis, while at the same time their company is investing in the dirty industries fueling it.”
According to the group, IAG has allocated $641 million in natural peril allowance for financial year 2020, up by nearly 100% over the last decade; but these allowance increases have remained insufficient. Over the last 14 years, the insurer has under-provisioned for natural perils 11 times, costing the company $1.14 billion since 2006. In FY19, natural perils amounted to 10.8% of IAG’s net earned premium, up from 7.2% in 2018.
“Currently, IAG is reporting a reduction in both carbon footprint and exposure to ‘higher risk’ companies in its equity portfolio over the last two years,” Brait said. “However, investors are not currently able to determine IAG’s actual coal, oil, and gas investment exposure, nor its expected trajectory, nor which companies are captured by IAG’s definition. This contrasts with IAG’s peers, QBE and Suncorp, which have announced clear positions on exiting all thermal coal investments.
“It’s in everyone’s interest that IAG phases out investments in coal, oil and gas. The company’s bottom line, shareholder value and the millions of Australians who trust IAG to protect their property, homes, and livelihoods deserve strong action on climate change.”