Oil & Gas

Extinction Rebellion, an activist group, conducted a week-long campaign against insurers to stop insuring oil and gas projects. However, it's unlikely that the insurance industry would be willing to drop clients that bring in between $1.6 billion and over $2 billion in premium income annually. The threat of reputation damage is also unlikely to be enough to make the industry stop insuring oil and gas projects.

In 2022, two major insurance companies, Allianz and Swiss Re, announced they would reduce their business with Big Oil, citing their net-zero efforts. This move was seen as a potentially effective strategy to push oil companies to become cleaner. However, climate activists argue that the insurance industry's actions are not sufficient, and they are calling for a more radical change: a complete halt in insuring oil and gas companies.

Euronews described insurance as "the Achilles heel of the fossil fuel industry," noting that without insurance, fossil fuel companies would bear the full financial risk of their projects. This could make them more cautious about undertaking such projects, which is what activists are hoping for.

While insurers like Swiss Re have committed to aligning their portfolios with net-zero goals, they are unlikely to completely give up insuring oil and gas due to the significant premiums these industries bring in. Insurers are also facing losses from weather-related events in their renewable energy portfolios, which adds to the challenge of giving up profitable oil and gas business.

Despite some insurers declaring they will not cover certain oil and gas projects, such as the Eastern African Crude Oil Pipeline, the demand for oil remains high, and producers are likely to find alternative ways to fund their projects. Insurers may face pressure to reconsider their stance on insuring oil and gas, as the transition away from hydrocarbons continues.