A group of significant insurers have publicly declared their discontinuation of membership with the Net-Zero Insurance Alliance (NZIA).
The insurers, namely, Lloyds, AXA, Sompo, Allianz and Scor, were the companies to leave the NZIA.
This move comes as a substantial blow to the United Nations Environment Program (UNEP)-backed initiative that endeavours to aid insurance companies in speeding up the global transition to net zero greenhouse gas (GHG) emissions through their underwriting and risk management practices.
The decision for this partnership dissolution is predominantly due to the mounting pressure from US Republican politicians who caution financial institutions including insurers and asset owners against potential legal infringements stemming from their involvement in climate-focused alliances.
Established in 2021, NZIA was launched by eight insurance and reinsurance companies including AXA, Allianz, and Scor as founding members. By early 2023, it had expanded to nearly 30 members representing about 15% of global premium volume.
NZIA aimed to shift insurance and reinsurance underwriting portfolios to net-zero GHG emissions by 2050. This was to be achieved through various avenues, including underwriting criteria and guidelines, client engagement, as well as the creation of insurance solutions for low-emission and zero-emission technologies and nature-based solutions, among others.
Additional details reveal that the insurance companies exiting NZIA are particularly those possessing substantial US business and exposure. This announcement followed the circulation of a letter sent by 23 US state Attorneys General to NZIA members. The letter expressed concerns regarding the legality of commitments made by the insurers to advance a climate-focused agenda, indicating possible anti-trust violations.
NZIA is a part of the Glasgow Financial Alliance for Net Zero (GFANZ), a UN-supported, climate-focused, multi-trillion dollar coalition of financial institutions. Among others, the coalition encompasses the Net Zero Asset Managers initiative (NZAM), the Net Zero Asset Owner Alliance (NZAOA), the Net Zero Banking Alliance (NZBA), and the Paris Aligned Asset Owners (PAAO).
Responding to these exits, a GFANZ spokesperson stated: “These political attacks are now interfering with insurers’ independent efforts to price climate risk, which will harm policyholders, main street investors and local economies. Despite these political headwinds, we will continue to support insurers’ efforts to manage climate risk and develop transition plans.”
Other insurers withdrawing from the alliance include founding members Munich Re, Swiss Re and Zurich Insurance Group, in addition to Hannover Re. Notably, all insurers that have exited NZIA have retained their membership in the NZAOA.
Keep up with all the latest FinTech news here.
Copyright © 2023 FinTech Global
