The Net-Zero Insurance Alliance (NZIA) is facing a crisis as three major European insurers, Axa, Allianz, and Scor, decide to withdraw from the initiative.
With these recent departures, the NZIA has now lost a total of seven large insurers, significantly diminishing its collective influence and raising doubts about its future. While the asset management, banking, and asset owner subgroups of the Glasgow Financial Alliance for Net Zero have largely weathered the storm, the insurance arm has struggled to attract members outside of Europe and Asia.
France’s Axa said it would “continue its individual sustainability journey, as an insurer, an investor and a responsible company”. Allianz said it remained “fully committed” to a parallel organisation for asset owners.
Reinsurer Scor’s departure was announced by its new chief executive at Thursday’s annual meeting, alongside a set of new climate pledges.
The departures from the NZIA follows growing US political pressure and concerns over potential antitrust violations. Republican politicians in the US have criticised collective climate action groups, perceiving them as targeting the oil and gas industry unfairly. US state attorneys-general raised concerns over the NZIA’s compliance with antitrust laws in a recent letter to its members.
“As the Net-Zero Insurance Alliance disintegrates before our eyes, we must ask why these huge companies with their hordes of lawyers did not see antitrust issues as a major obstacle when they founded the alliance. And we must wonder whether their ditching of the alliance has more to do with fears of losing business in the US than real legal jeopardy,” said Patrick McCully, senior analyst at the non-profit Reclaim Finance.
Insiders believe that the insurers would likely prevail in a legal battle but wish to avoid the associated distractions. Additionally, European governments have expressed concerns about potential energy cost increases if insurers collectively stop underwriting fossil fuels, citing national security reasons.
The challenges faced by the NZIA highlight the need for government intervention and regulation in the insurance industry. Activist investors and campaigners have been pressuring insurers to reduce coverage of polluting sectors. Critics have pointed out the lack of US members in the NZIA and the absence of a ban on insuring coal as conditions for joining the alliance.
Despite these setbacks, Lloyd’s of London, a speciality insurance market, remains a member of the NZIA, while the United Nations Environment Programme Finance Initiative, which coordinates the NZIA, has not yet provided a comment on the recent departures.
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