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US insurers braked in their climate commitments?

On 1st June of this year, Donald Trump decided to pull his country out of the Paris Agreements signed in December 2015 by 195 delegations with the aim of mitigating global warming. Although this declaration was strongly criticised, the reactions of American insurers have varied widely.

US insurers braked in their climate commitments?

In early June, the official authorities in the US insurance sector, such as the American Insurance Association (AIA) and the Reinsurance Association of America (RAA), did not comment on Donald Trump's decision.

This silence could be considered surprising since a hurricane like Sandy, which wreaked havoc on the East coast in 2012, caused $68 billion of damage in 12 States. In this total, the insured losses amounted to $26 billion, 73% of which was covered by private companies, and the balance by the National Flood Insurance Program.

Harvey storm, which ravaged Houston at the end of August, shows once again the amplification of natural disasters in the United States, in frequency and intensity.

Divisions among reinsurers

The main reactions have tended to come from European reinsurers based in the United States, such as Munich Reinsurance America, and from personalities such as Mike Kreider, the High Commissioner for Insurance in Washington, who considers that Donald Trump's position is short-termist. He will continue to ask insurers under his authority to publish their climate risk reports.

The same applies to his counterpart, David Jones, who launched an initiative in California in January 2016 to urge insurers to withdraw from fossil energies.

The carbon issue

According to the latest annual classification published by the British NGO Asset Owners Disclosure Project (AODP), 63% of the institutional investors analysed are lagging behind on climate issues in the United States, against just 3% in France. Barring a few exceptions, such as Allstate, which has begun to pull out of the sector, they are continuing to support the coal industry, due to its economic importance.

Its Chief Executive Officer, Julian Poulterbelieves that certain American insurers could be caught between hammer and anvil with regard to:

·         A potentially dramatic rise in claims associated with climate change.

·         Excessively high-carbon investments.

Beyond the slogans, American insurers that delay in committing to combat global warming could be put under growing pressure from certain stakeholders such as shareholders, NGOs and young graduates.

Crédit Agricole Assurances: towards the decarbonisation of its assets

Crédit Agricole Assurances excludes from its portfolios companies that earn over 50% of their turnover from coal mining activities.

Under the impetus of the new regulations, we have undertaken to monitor the carbon footprint of our portfolio with a view to its progressive decarbonisation in order to reduce the financial risks of transition towards a lower-carbon economy.

That is why Crédit Agricole Assurances is increasingly favouring renewable energy installations (5% of the installed capacities in France) in its investments. The same applies to its real-estate investments, with a preference for environmental quality labels (50% of office space).

 

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