Three of Europe’s largest insurers have quit the industry net zero initiative

As US political pressure grows and legal concerns increase, three of Europe’s largest insurers have left the Net-Zero Insurance Alliance.

Axa and Scor, former members of the NZIA and former chairs of the group, announced on Thursday their departure from the umbrella group Glasgow Financial Alliance For Net Zero created by former Bank of England Governor Mark Carney ahead of the UN Climate Summit in Glasgow, 2021.

With the departures, the number of large insurance companies that have left the NZIA has now reached seven. This severely limits its collective power and raises questions about its future. On Thursday, its website listed 23 members.

Gfanz, and its members, have been attacked by Republican politicians in the US who target collective Climate action group they perceive as unfairly hitting oil and gas industries.

Except for a high-profile departure in December from US asset manager Vanguard, Gfanz’s asset management and banking subgroups, as well as its asset owner group, have largely weathered this storm. Gfanz didn’t immediately respond to an inquiry for comment.

The NZIA’s insurance arm has had a difficult time gaining members outside Europe and Asia. And earlier this month its members received a letter by US state attorneys general raising “serious concern” about whether the alliance was compliant with antitrust laws.

Munich Re, a world-leading reinsurer and founding member of NZIA left the group at the end of March. The chief executive of the company said that he didn’t want to expose his group to “material antitrust risk”.

Zurich and Hannover Re both left the industry in April. Swiss Re, a reinsurer, also left this week.

“As we watch the Net-Zero Insurance Alliance crumble before our very eyes, it is important to ask ourselves why these large companies and their armies of lawyers didn’t see antitrust as a major issue when they formed the alliance. We must also wonder if their decision to abandon the alliance is more due to fear of losing business in America than actual legal risk.

Two people who were briefed about the insurers’ decision to leave said that they didn’t think the initiative would lose in court, as it had considered issues of competition from the beginning, but were afraid of the distraction this would cause. One person said, “This is a fight that insurers could spare themselves.”

According to a source close to the Glasgow Financial Alliance’s leadership, European governments also privately expressed concern that the insurers of the NZIA might cause energy costs to increase if they collectively stopped covering fossil fuels.

The person stated that “for national security reasons” they were concerned about keeping the light on.

Axa, a French company, said Thursday it would “continue to pursue its own sustainability journey as an insurer and investor, but also as a responsible business”.

Allianz stated that it was “fully committed” in a parallel organization for asset owners.

The new CEO of Scor announced the departure of its reinsurer at Thursday’s Annual Meeting, along with a number new climate pledges.

Over the past few years, activists and campaigns have increased pressure on insurers to reduce their coverage in the most polluting industries.

NZIA is an attempt to bring together insurers with the common goal of reducing their carbon footprint. critics have highlighted that there are no US members, and that joining the association does not require a prohibition on coal insurance.

Peter Bosshard of Insure our Future, the group that advocates for government intervention, said the challenges facing the NZIA show the need for more government regulation. “If insurers cannot act together, then this is a good reason for regulation.”

Lloyd’s of London is the City’s specialty insurance market. It was again protested by climate activists on Thursday at its annual meeting. However, it said that it remains a member of NZIA. Later, it added that it would be reviewing the letter from US state attorneys general and that “individual businesses operating in the Lloyd’s Market are responsible for making their own business and strategic decisions.”

The United Nations Environment Programme Finance Initiative (which convenes NZIA) did not respond immediately to a question about the recent departures. However, it has noted in the past that this is “a voluntary effort”.