LOS ANGELES, CA (March 3, 2021)—Today, the Los Angeles City Council unanimously passed a motion authored by Councilmember Bob Blumenfield to evaluate prospective insurance companies based on their underwriting and investment in fossil fuels.
According to a recent report, the City of L.A. is paying nearly $4 million in annual insurance premiums, many of which are going to insurance companies that are fossil fuel underwriters and investors. By taking a step to evaluate prospective insurers based on their fossil fuel business, L.A. becomes the largest city to adopt such a policy, following Boulder County, Colorado; San Francisco, California; Cambridge and Sommerville, Massachusetts; and Paris, France. The motion will now go to the Mayor for signature.
"It's absolutely unconscionable how so many insurance companies are investing in and underwriting risky fossil fuel projects with zero thought about the climate or care for the wellbeing of future generations," said Councilmember Bob Blumenfield. "The time is now for the City of Los Angeles to seriously rethink which insurance companies are worth doing business with, and which are out to make a quick buck on the expense of polluting our planet.”
Climate change has had a significant impact on insurance for Californians: in recent years, insurers in California dropped coverage for hundreds of thousands living in wildfire risk areas until a moratorium was put into effect by Insurance Commissioner Ricardo Lara.
At the same time, U.S. insurance companies continue to back the fossil fuels driving the climate crisis by providing the insurance they need to operate. The insurance industry is also a major institutional investor in fossil fuel companies; U.S. insurers alone have $90 billion invested in coal. Globally, at least 26 insurance companies have ended or limited their coverage for fossil fuel projects and companies, mainly in the coal sector, but U.S. companies largely continue to support fossil fuel expansion worldwide.
Blumenfield’s motion instructs the City Administrative Office (CAO) to inventory the insurance policies held by the city, and to develop a method for evaluating insurers based on their investment and underwriting in companies engaged in fossil fuel operations that “pose the greatest harm to the environment, including coal mining, tar sand drilling, and pipeline transport.”
The motion also instructs the CAO to request the Airport, Water and Power, and Harbor departments to report in 90 days with options for how to use this evaluation method to choose companies from which to purchase or renew insurance. The motion is supported by community impact statements from 11 neighborhoods.
SoCal 350 Climate Action Lead Member Rhonda Plank-Richard said, “SoCal 350 Climate Action applauds this important first step towards making insurers accountable for safeguarding a livable and secure future. City insurers should not be in the business of financing and underwriting climate catastrophe.”
U.S. insurers have come under increased scrutiny from the public sector, businesses, Indigenous Peoples, and NGOs for their role in underwriting fossil fuel projects worldwide including harmful oil pipelines and coal mines. Fossil fuels are the primary driver of climate change, and a recent study found that they directly caused 8.7 million premature deaths annually from 2012 to 2018.
Councilmember Blumenfield worked hand-in-hand with advocates across the City of LA and with Insure our Future to gain support for this measure. “I'd like to give a huge thanks to the Insure Our Future campaign and the several local groups I've worked with on this effort, including SFV Climate Reality, the Neighborhood Council Sustainability Alliance, SoCal350 Climate Action, and so many others who have tirelessly pushed for this to be heard in Neighborhood Council meetings and advocated for it to be heard by the City Council for the past year. This is a first step, but a huge win,” Councillmember Blumenfield said.