Lemonade Insurance is one of 60 companies that have signed an open letter to the insurance industry, calling on it to divest from fossil fuel investments and stop insuring coal, oil, and gas businesses.
The move is part of a new strategy by environmental activists to ally with (re)insurance clients and use their buying power to push for change in the industry.
"When you're trying to put out the fires, you don't invest in lighter fluid – but that's exactly what insurance companies investing in fossil fuels are doing,” said Thomas Oppel, executive vice president at American Sustainable Business Council and one of the organizers of the letter.
Other companies on the list include those whose businesses are directly imperiled by a warming climate, including the Aspen ski resort and snowboard and skiwear maker Burton. Patagonia – the outdoor clothing company that makes the gilets popular on Wall Street – and Bigelow Tea are other signatories. Ice cream producer Ben & Jerry’s additionally signed the letter, although its corporate parent Unilever did not.
Already a number of prominent European insurers – including Scor and Allianz – have pledged to curb coal mining and power station underwriting to varying degrees. Zurich has decided to come off the liability tower for the controversial Trans-Mountain Pipeline in Canada, in line with a pledge to eliminate oil sands risk from its book, and bans on fossil fuel investing are commonplace in the insurance industry and across asset management.
US carriers including Liberty Mutual and Chubb have come under scrutiny for insuring oil pipelines and coal mines, including the Trans-Mountain project.
Lemonade is one of handful of publicly listed Benefit Corporations (B Corp), meaning the company has to comply with a set of social and environmental criteria conferred on it by the awarding body B Lab.
Lemonade cedes half its premiums to reinsurers, although its Hannover Re-led panel will remain stable for the next three years under a long-term treaty that incepted on July 1.
“Back in 2018, Lemonade was the first US insurer to commit to not invest in fossil fuels,” said a Lemonade spokesperson.
“Beyond its impact on climate change, to be paying for the damages of wildfires, hurricanes, and other climate disasters while simultaneously funding the very industries that are responsible for some of the worst of those damages, simply didn’t make sense to us,” the spokesperson added.
Patagonia said it will not buy insurance from carriers that sell insurance to the fossil fuel industry.
Yvonne Besvold, treasurer of Patagonia, explained: “By choosing to work with insurance partners who have committed to not insuring the fossil fuel industry, especially the most harmful sectors like coal, tar sands, and Arctic drilling, businesses send a powerful message that can help sway the industry from continuing to support the drivers of climate change.”
“We think it's time for the US insurance industry to stop insuring fossil fuels and actively support solutions to the climate crisis,” she noted.