Consumer groups are sounding the alarm about the insurance industry’s continued support for fossil fuel projects, arguing that it worsens climate change and ultimately leads to higher premiums for homeowners insurance. The criticism comes as lobbyists for the American Property Casualty Insurance Association were on Capitol Hill for their annual ‘Legislative Action Day.’
The four organizations — U.S. PIRG, Consumer Federation of America, Americans for Financial Reform, and Public Citizen — argue that by underwriting oil and gas expansion projects and investing consumers’ premium dollars in fossil fuel companies, the insurance industry is contributing to the very problem that drives up claims and, subsequently, premiums. This cycle has hit Illinois particularly hard, with the state seeing the second-highest premium increases in the nation from 2021 to 2024. Homeowners insurance premiums in Illinois rose about 50% to an average of $2,942 for $350,000 in replacement coverage for a typical homeowner.
The issue is not limited to coastal states dealing with hurricanes; Midwestern states like Illinois are experiencing damage from more frequent and severe thunderstorms and wind storms. The consumer advocates argue that rising insurance rates disproportionately harm low-income communities by stifling the development of affordable housing.
While some insurers have adopted restrictions on underwriting coal projects, the U.S. insurance industry has been criticized for not going far enough in embracing cleaner energy. The industry has instead pushed for better wildfire prevention and community resilience to climate change. Dave Snyder of the American Property Casualty Insurance Association defended the industry’s role in addressing climate change, stating that property casualty insurers have been leaders in advocating for stronger mitigation and resilience efforts.
However, consumer advocates like Carly Fabian of Public Citizen argue that state insurance regulators need to pay more attention to climate change. Fabian pointed out that recent legislative priorities from the National Association of Insurance Commissioners failed to mention climate change, highlighting a significant oversight in addressing the issue.
The problem is compounded by the current administration’s rollback of efforts to address climate change, including withdrawing from the Paris Agreement and pausing wind power development. As climate change continues to drive more frequent and severe weather events, the cycle of rising insurance premiums is likely to continue unless the insurance industry and regulators take more decisive action.
