With little regard for the long-term risks, insurance companies continue to invest in fossil fuels. (Credit: 3DSculptor/Shutterstock)
The insurance industry is built on trust. Homeowners pay their premiums each month with the understanding that they can trust their insurer to help them recover when disaster strikes. Now, this confidence is being tested like never before as increasingly destructive and frequent climate events have left homeowners facing higher insurance premiums, less comprehensive coverage and, in some areas, the inability to find coverage at all.
Behind the current crisis lurks a betrayal of this trust: Insurance companies are funneling a staggering amount of money into the very industry driving these disasters.
According to the NOAA, the U.S. has spent more than $2.91 trillion recovering from billion-dollar-plus climate disasters since 1980, and these costs show no signs of slowing. In the 1980s, the U.S. experienced an average of 3.3 disasters that caused losses of more than $1 billion each per year. From 2022 to 2024, the annual average jumped to 24.3 disasters.
(Author’s note: In May 2025, the NOAA announced the end of several of its databases due to “evolving priorities, statutory mandates and staffing changes.” These casualties included the “Billion-Dollar Weather and Climate Disasters” database, which is referenced above and frequently cited in insurance industry research. While previous data remains on the website, the NOAA will no longer update the database.)
Insurance companies have responded to this increase in disasters by raising homeowners’ rates or pulling out of certain markets completely. However, considering what we know about how the fossil fuel industry drives climate change, why are so many insurance companies putting their money into those assets rather than trying to make them pay their fair share?
Public officials have begun to speak out on the topic. U.S. Rep. John Garamendi and California State Senator Jerry McNerney recently published a commentary in the East Bay Times encouraging insurance companies to sue fossil fuel-related operations to recoup some of these damages, rather than pass the buck to customers.
In their column, Garamendi and McNerney reference a study from Nature that shows greenhouse gas emissions caused an estimated $28 trillion in global climate damage from 1991 to 2020. The companies responsible include Chevron ($1.98 trillion in economic losses), ExxonMobil ($1.91 trillion) and BP ($1.45 trillion.)
Despite contributing to climate disasters, the oil and gas industry has remained remarkably lucrative, with profits exceeding $1 trillion in the last ten years. Meanwhile, homeowners in the U.S. have faced average premium increases of 24% over the last three years; totaling an extra $27 billion spent by policyholders.
A report from Ceres shows that the insurance industry’s investment in fossil fuel-related industries reached $526 billion in 2019. Around 50% of the half-a-trillion in investments is held by the top 16 U.S. insurers, with Berkshire Hathaway and State Farm holding the largest stakes.
With little regard for the long-term risks, insurance companies continue to invest in fossil fuels. Some states, including California, have already sued Big Oil for the industry’s “decades of deception, cover-up, and billions of dollars in harm done to our state,” and it is time for insurance companies to take up the fight as well for the sake of the customers who trust them.
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