State Farm & Other Insurance Companies Refuse Are Major Investors In Fossil Fuels

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People are beginning to wake up to the new reality, which is that human-caused climate change is rendering their homes uninsurable. Without insurance, they face financial ruin if a wildfire, hurricane, or other calamity destroys their property. The lack of insurance prevents people from obtaining loans to repair or rebuild their homes. It also makes it harder to sell their homes to buyers who need a mortgage. But while it seems entirely logical for insurance companies to shy away from scenarios that carry higher than normal risks, what is not so logical is that the same companies are also propping up the very fossil fuel companies that are the primary cause of the global overheating.

Insure Our Future focuses on the insurance industry’s ties to the climate crisis. Risalat Khan, a senior strategist with Insure Our Future, told Truthout recently, “The insurance industry has the option of cutting exposure to fossil fuel expansion overnight, but rather than doing that, they’re continuing to play both sides.” There is a broad consensus that global heating is driving the rise and intensity of extreme weather events. The Intergovernmental Panel on Climate Change (IPCC), has concluded as an “established fact” that “human-induced greenhouse gas emissions” have increased the frequency and intensity of extreme weather. It has also concluded with “high confidence” that fire weather conditions “will become more frequent in some regions at higher levels of global warming.” Burning of fossil fuels is responsible “for over 75 percent of global greenhouse gas emissions and nearly 90 percent of all carbon dioxide emissions,” according to the United Nations.

Global heating is not the sole driver of this insurance industry crisis, but it may be the primary one. A recent report by Insure Our Future found that “over one third of weather related insured losses over the last two decades, totaling $600 billion, can be attributed to climate change,” and that the “climate-attributed share of insured weather losses rose from 31% to 38% over the last decade on average.” Yet, many insurance companies remain committed to propping up the fossil fuel industry as both insurers and investors. The fossil fuel industry could not proceed with business as usual, including its ongoing expansion, without the critical services that insurance companies provide in underwriting everything from the buildout of oil pipelines to the construction of liquefied natural gas (LNG) export facilities.

Insurance Companies Play Both Sides Of The Street

A 2023 Insure Our Future report estimated that a small handful of insurance giants, including AIG, Chubb, and Liberty Mutual took in around $2.6 billion from fossil fuel insurance in 2022. A 2024 report by Public Citizen and Rainforest Action Network showed how top insurers are widely underwriting the Gulf Coast LNG export boom. However, insurers don’t just insure the operations of the fossil fuel industry. They are also massive investors in those industries. A big part of the insurance industry business model involves repackaging a chunk of aggregate premium payments they take in from clients as pools of cash to invest in financial instruments like stocks and bonds. Top insurers like State Farm have billions in oil and gas holdings and are among the top shareholders of major oil companies such as ExxonMobil and Chevron, even as they decline to renew thousands of insurance policies.

Nor are insurance companies minor investors, Truthout says. They are huge, multifaceted financial institutions with over a half trillion dollars invested in fossil fuels.Some have major stakes in the same oil and gas companies they are underwriting, feeding the very extreme weather that is generating a crisis in their own industry. Khan calls this a “vicious cycle” where insurers “are making the problem worse by investing and underwriting fossil fuel expansion, despite being exposed to paying out these losses.” Insurers do this with the assumption that they can reduce their risk by non-renewing policies or raising premiums. “They’re making the risk worse and then charging more for those risks, or removing those from the balance sheets,” he said. Overall, that “pushes the broader system towards these tipping points where we cannot manage these risks anymore and people don’t have the money to be able to pay for these costs.”

Big Oil Interests

Scientists and world leaders have noted that climate change likely intensified the Los Angeles fires, with “weather whiplash” and low soil and fuel moisture levels. More broadly, state agencies have reported extensively on the climate crisis’s impact in California, affecting everything from coastal erosion and water supply to fire risks and damage to agriculture. Fifteen of the twenty most destructive wildfires in California history have occurred over the last decade. As a result of rising extreme weather events in California and the massive costs of insurance payouts, companies have been curtailing their business in the state. In 2023, 7 of the top 12 insurance companies in California paused or limited new policies there.

Khan notes that companies like State Farm, Travelers, AIG, Liberty Mutual, and others have simultaneously pulled back from insuring Californians while also remaining wedded to fossil fuels. “These are all insurers that either have huge investments in fossil fuels or they’re underwriting fossil fuel expansion. With each of these companies, the hypocrisy is very visible.”

This insurance crunch has several consequences, including piling more people into an already overburdened state insurance plan, and driving up rental and costs of home ownership. At the same time, top insurers in California remain committed to investing in fossil fuels. A 2023 briefing by Insure Our Future identified a “dirty dozen” group of home insurers, including Berkshire Hathaway, State Farm, and Nationwide, that have restricted coverage in California citing climate risks, but remained deeply embedded with the fossil fuel industry. Collectively, they have an “estimated $113 billion of investments in and $3.6 billion of underwriting income from fossil fuels,” said the briefing.

Last September, the Wall Street Journal reported that State Farm and Berkshire Hathaway, which also does extensive business in California, “made multibillion dollar bets on major oil companies” that were large enough to help offset a decline in fossil fuel investments in other parts of the industry. The investigation noted that State Farm and Berkshire “drove the industry’s overall exposure to fossil fuels higher, pushing it to 4.4% of their portfolios from 3.8%,” and that “the value of fossil fuel holdings by the property and casualty industry rose to $84.6 billion” in 2023 from $57 billion in 2014, driven in part by the investments by those two companies.

A Truthout analysis of State Farm’s most recent SEC disclosure of its holdings, filed in November 2024, less than two months before the Los Angeles fires started, shows continued huge investments in fossil fuels. For example, the disclosure reveals over $5.5 billion of holdings in two Big Oil companies — $3,577,589,566 in ExxonMobil and $1,963,729,843 in Chevron. According to the financial data site WhaleWisdom.com, this makes State Farm among the top 20 shareholders of both companies. The filing also shows a $411,541,212 stake in Duke Energy and $122,536,947 invested in Shell. State Farm also disclosed $86,443,949 worth of holdings in Enbridge, the company behind the controversial Line 3 and Line 5 pipelines.

Ultimately, a huge question looms over the insurance industry — Is it really worth propping up the fossil fuel industry even as climate chaos upends its own business? Among 28 major property and casualty insurers overseeing more than one third of the industry’s collective global market share, fossil fuel premiums “represent under 2% of their total insurance premiums in 2023. “Why are insurers destabilizing the majority of their business for such a small fraction of revenue that they’re getting from fossil fuels?” asks Khan. “Does this really make economic sense for insurers?”

Khan takes some solace in the knowledge that people are catching onto the role insurers play in the climate crisis. Climate and environmental justice organizers across the U.S. and beyond are increasingly focusing on insurance giants. “The insurance industry could be one of the biggest positive forces in the climate story,” said Khan. “They can look at their fossil fuel clients and say, we’re not going to insure their reckless expansion plans anymore, because this is too costly for us and it’s too costly for everyone.”

People could also vote with the wallets to deselect State Farm and the other insurance companies when considering who to do business with (assuming they have other options available). They could also push back against popular sports figures like Patrick Mahomes and Andy Reid of the Kansas City Chiefs who shill for State Farm in their commercials. Both have more than enough money and don’t need to prostitute themselves for a company that is deliberately promoting the climate emergency. Shame on both of them.