Five major insurers have resigned from the Net Zero Industry Initiative

Three of Europe’s largest insurers and Japanese and Australian insurers have pulled out of the Net-Zero insurance alliance as mounting US political pressure and legal concerns have plunged the climate initiative into crisis.

Axa, the former head of the group, Allianz, and Scor, as well as Japan’s Sompo Holdings, said on Thursday they would leave NZIA, part of Mark Carney’s umbrella group Glasgow Financial Alliance for Net Zero, set up by the former England governor ahead of the UN climate summit. in Glasgow in 2021.

Australian insurer QBE said on Friday it had also left the Climate Club after joining in February 2022.

The departures bring the total number of large insurers leaving NZIA to at least nine, severely limiting their collective strength and calling into question their future. Its website listed 22 members on Friday.

Gfanz and its members have come under attack from Republican politicians in the US, who are targeting collective climate action groups they see as unfairly hitting the oil and gas industry.

On Friday, Gvans said “political attacks” were interfering with “insurers’ efforts to price climate risk, which will hurt policyholders, principal investors and local economies.” It pledged to continue to support insurance companies’ efforts to develop transition plans.

Other than the high-profile departure of US asset manager Vanguard in December, Gfanz’s asset management, banking and asset-owner subgroups have mostly weathered the storm.

However, the insurance arm, NZIA, has struggled to win members outside of Europe and Asia. And earlier this month, a letter was sent to its members from US attorneys general raising “serious concerns” about whether the alliance had complied with antitrust laws.

Munich Re, one of the world’s largest reinsurers and a founding member of NZIA, resigned from the group in late March. Its chief executive said he did not want to expose the group to “material antitrust risk”.

Zurich, an insurance group, and Hannover Re, another reinsurer, left in April. It also left reinsurer Swiss Re earlier this week.

“As the Net-Zero insurance alliance disintegrates before our eyes, we have to ask why these massive corporations with their legions of lawyers didn’t view antitrust issues as a major hurdle when they founded the alliance. We have to wonder what If their abandonment of the alliance has more to do with fears of losing business in the US than a real legal risk.”

Two people who have been briefed on the insurers’ decisions to resign said they don’t think the initiative, which has looked at competition issues from the start, will lose a legal battle, but they fear it could cause a distraction. “This is a fight that insurance companies can save themselves,” said one.

European governments have also privately expressed concerns that NZIA insurers could cause the cost of energy to skyrocket if they collectively stop insuring fossil fuels, according to a person close to the leadership team at the Glasgow Financial Alliance for Net Zero.

For the sake of national security [reasons] “They worry about keeping the lights on,” the person said.

France’s Axa said Thursday that it will “continue its individual journey in the field of sustainability, as an insurer, investor and responsible company”.

Allianz said it remained “fully committed” to a parallel organization of asset holders.

The departure of reinsurer Scor was announced by its new chief executive officer at Thursday’s annual meeting, along with a raft of new climate pledges.

Japanese insurer Sumpo, which joined the alliance last June, said it would continue to pursue its climate goals “aggressively” outside of the group.

Insurers have come under increasing pressure from investors and activists in recent years to cut coverage of the most polluted sectors.

NZIA was one attempt to group insurers around the goal of reducing the carbon footprint of their underwriting, but critics highlight the lack of US members and the fact that banning coal insurance was not a condition of joining.

The challenges NZIA is facing illustrate the need for greater intervention by governments, argued Peter Boshard, coordinator of our Insurance for the Future group: “If insurers can no longer act collectively, that is a strong reason to regulate.”

Lloyd’s of London, the city’s specialist insurance market, which was the subject of another outcry by climate activists at their annual meeting on Thursday, said it remains a member of NZIA. It later added that it was reviewing the letter sent by US Attorneys General and noted that it was “for individual firms operating in the Lloyd’s market to make their own commercial and strategic decisions”.

The UN Environment Program Funding Initiative, which is holding the NZIA meeting, did not immediately respond to a request for comment on the recent departures, but previously indicated it was a “voluntary initiative”.