Climate change: made possible by QBE
Much like the major banks, insurance companies play an essential role in determining whether fossil fuel projects go ahead.
But there’s something very different about insurers. They are connected to both the causes and impacts of climate change, paying out in the tens of millions of dollars at a time on extreme weather events, which are being made more frequent and intense as a result of climate change.
Why would insurance companies underwrite projects like oil rigs and coal mines, that pose massive financial risks to the company, not to mention the risks faced by humanity through climate change? QBE is a good example of who to ask first: until recently, they prided themselves on supporting dirty fossil fuels.
QBE is making huge payouts on climate change impacts, but remains a critical supporter of the fossil fuel industry.Tell QBE to stop supporting the fossil fuel industry
French-based insurance giant AXA has provided something of an example for QBE to follow. In early September the company’s head of Corporate Responsibility, Sylvain Vanston, detailed AXA’s decision to divest from companies deriving more than 50% of their business from coal. The move resulted in the firm dumping €500m (AU$737m) of shares in around 100 companies.
Significantly, Vanston also stated AXA had terminated contracts with a number of insurance clients in the coal industry. While Vanston said AXA would not be divesting from oil and gas companies “right now,” he did note that the company is taking climate risk into account on a case by case basis for all energy projects.
Also in September, Bank of England Governor Mark Carney again spoke of the important role insurers must play in the response to climate change, noting they were on “the front line.”
“With their motives as global citizens sharpened by commercial concerns, insurers have some of the greatest incentives to understand and tackle climate change in the short term.” – Mark Carney
Closer to home, calls for QBE to quit coal have also been aired loud and cleared. A group of Market Forces volunteers handed out 1000 clap banners to Sydney fans as they headed into the MCG ahead of the team’s preliminary final. Reading “Swans goal” on one side and “QBE quit coal” on the other, the banners were a great way for fans to support their team and call for strong climate action from its major sponsor at the same time.
Activists on Monday 2nd May gave QBE’s headquarters a colourful new rebranding, illustrating how the insurance company was making climate change possible through its underwriting of major fossil fuel projects.
Posters bearing the slogan “made possible by QBE”, a company favourite, were put on display outside the building in Sydney’s financial district as staff of the company arrived at work. The posters connected QBE to climate impacts such as coral bleaching, bushfires and major coal mining projects.
Proudly supporting fossil fuels
Fossil fuels might be something the company tries to shy away from today, but only a few years ago, they were clearly proud of their role as a major insurer of coal mines – demonstrated beautifully by their annual report’s cover from 2012 (pictured here).
A significant part of QBE’s business model involves underwriting large energy projects including offshore oil rigs, gas pipelines and coal mines. The great irony here is that QBE claims to incorporate environmental risks in its approach to underwriting, while among the many fossil fuel projects it has underwritten, you’ll find projects like the BP Deepwater Horizon, Pemex, which also exploded in the Gulf of Mexico, and Ultracargo in Brazil.
On a good day, these projects are digging up more and more carbon that is putting the climate at risk. On a bad day, they’re a massive hazard for the environment and human life.
Does QBE not understand the role of the fossil fuel industry in driving climate change? Or the fact that oil spills and coal dust kill ecosystems and people? Maybe QBE simply doesn’t believe climate change is an environmental risk.
And then there’s the company’s own investments in the fossil fuel industry. While these aren’t publicly disclosed, it is likely that QBE has significant exposure to fossil fuel assets through its investment portfolio.
Paying the price
It’s widely known that climate change is causing increasingly more frequent and severe natural disasters. QBE is failing to keep up with the changing environment and it’s costing them dearly. Over the past five years, QBE has paid out AU$1.29 billion more than it provisioned for extreme weather events.
Major payouts for recent weather events include US$144 million for UK storms Desmond, Eva and Frank in late 2015, US$108 million for Cyclone Pam in March 2016 and US$76 million for NSW east coast storms in April.
Last year alone, large risk and catastrophe claims cost the firm US$1.35 billion – a significant drop from the US$2.35 billion paid out in the disaster-ridden 2011, but well above QBE’s long term average prior to 2010. The 2015 total included a “spate of large individual energy risk claims” suffered by QBE’s European Operations in the first half of the year.
QBE is in a unique position – they have the choice to finance the expansion of the fossil fuel industry through underwriting and debt. But if they choose to do so, they will continue to face the increasing cost of extreme weather events. Green-washing will not address climate change nor the inherent risk in their portfolios. Only serious and rapid change to their business model will.
What we need from QBE
QBE, more than most, should understand the risk of climate change and the urgent need for strong action to curb emissions. It is in a unique and powerful position to genuinely combat climate change and safeguard its own business. But to do so, it must take serious action internally and advocate publicly for comprehensive policy change.
We’re calling on QBE to:
- Unequivocally rule out future underwriting of coal, gas and oil production, transport and infrastructure projects;
- Divest from fossil fuel assets in its investment portfolio, and use that money to invest in renewable energy; and
- Take a leading role in the public debate on climate change, calling for action from Australian governments and businesses to limit global warming as much as possible.