oil and gas insurance

Insurers invest £6bn in North Sea oil firms while removing cover on climate frontline

Insurance companies have invested over £6 billion in the biggest firms operating in the North Sea oil and gas industry since 2016, while at the same time removing coverage and raising prices in communities on the frontline of the climate crisis.

An analysis seen by The Ferret has found that 22 of the world’s biggest insurers invested £6.3bn between 2016 and 2021 in energy companies who drill in the North Sea

Three European insurers — Axa, Allianz and Aviva — provided the majority of that funding, contributing a combined £4.3bn for oil and gas companies over the five-year period.

But while it funds fossil fuel companies that contribute to global heating, the insurance industry is hiking premiums for UK homeowners at risk from climate-related flooding. In global regions facing more frequent natural disasters due to climate change, insurers are withdrawing coverage altogether. 

Campaigners said the investments revealed the “staggering hypocrisy” that underpins the insurance industry’s approach to the climate crisis. They added that the findings undermined insurers’ claims to “understand climate science and to be leaders on climate action”. 

The figures come from an analysis of insurers’ North Sea investments conducted by campaign group Uplift, and a non-profit research firm called Profundo

Uplift and Profundo estimate that £271m worth of these global investments have directly funded production and exploration in the North Sea since 2016. This figure is based on the proportion of the companies’ operations that are carried out off the UK coast.

The insurance industry defended the investments. They argued that remaining invested allows them to “establish a dialogue, advocate for change and exert pressure” on the fossil fuel companies to improve their climate credentials. 

Insurers claim to understand climate science and to be leaders on climate action, yet all the while they fund the oil companies who are causing climate change.

Lindsay Keenan, Insure Our Future

Scientists have widely linked the increasing rates of natural disasters and extreme weather events to the climate crisis. The extraction and burning of oil and gas for energy is a major source of carbon emissions, the main driver of global heating. 

Insurance companies have a dual role in this process, because they fund and insure projects which contribute to global warming in one part of the world, while insuring individuals and communities against climate risks in another.

Alongside their investments in oil and gas companies, the Insure Our Future campaign estimates that insurers receive £13.7bn each year in premiums from the oil and gas industry. 

Without insurance, new fossil fuel exploration and production cannot go ahead. Insurance contracts are not made public for new oil and gas projects, so it is unclear who is underwriting new developments in the North Sea. 

Aviva estimates that one in five properties in the UK are now at risk from surface water, coastal, or river flooding. The “major spike” in claims caused by this flooding will inevitably lead to higher prices for home insurance particularly in high-risk areas, insurance insiders have said

This is expected to exacerbate the ‘poverty premium’ paid by disadvantaged communities when buying insurance. In April 2021, it was reported that a disproportionate number of new homes built in poorer areas in England and Wales will be at high risk from flooding due to climate change.  

The Scottish Government has told developers to avoid building homes on flood plains, but it’s figures say that 284,000 homes north of the border are in flood risk areas. A further 110,000 houses are expected to be at risk by 2080. 

In 2020, eight thousand people died across the world as a direct result of natural disasters. Insured losses from these events totalled £72bn, making it the fifth costliest year on record for private and public insurance firms. 

The Asia-Pacific region suffered an estimated £75bn of direct economic loss and damage from natural disasters in 2020. Only 12 per cent of this was covered by insurance, though. 

Meanwhile, California has imposed temporary bans on insurers cancelling policies due to climate risks, due to an increase in flooding and wildfires in the state.

One of those to have coverage removed was Don’t Look Up film director, Adam McKay, who tweeted that his provider had cancelled his insurance due to the threat of wildfires.


The US Government last year produced a 40-page plan to reform the insurance and housing industries which partially addressed the impact of climate change on insurance. 

Lindsay Keenan, European coordinator of Insure Our Future said that insurance companies “should not be investing in, nor insuring, fossil fuel companies that have oil and gas expansion plans”. 

“Insurers investing in oil companies reveals their staggering hypocrisy. Insurers the world over are excluding or increasing the costs of insurance for householders in climate change impacted areas,” Keenan said. 

“Insurers claim to understand climate science and to be leaders on climate action, yet all the while they fund the oil companies who are causing climate change.”

Uplift director, Tessa Khan, argued that the insurers’ continued investments in the companies “is locking us into a dangerous, polluting and expensive fuel”. 

Khan said: “Now more than ever, it is clear that we have to stop backing fossil fuels and invest instead in the UK’s abundant and affordable sources of renewable energy. 

“The government needs to stop these firms from continuing to make vast profits from oil and gas at our expense, and redirect all that private investment into the UK’s vast renewable resources, for the sake of people’s bills, jobs and the climate.”

The Net Zero Asset Owners Association (NZAOA) —  a UN scheme which helps decarbonise the portfolios of big insurers including Axa, Aviva and Allianz —  said that requiring investors to completely divest from oil and gas “would not be science-based”. 

“Portfolio divestment does not contribute to the wider economic transformation needed to limit global warming to 1.5°C since other institutional investors with lower climate ambition and engagement efforts will continue to invest in carbon-intensive assets,” they said. 

“The NZAOA argues for engagement and active ownership as the primary tool for engendering real-economy impact and maintains that divestment should be a last resort.”

A spokesperson for Aviva Investors said: “Engagement is our preferred approach to stewardship, but we will divest from companies that have repeatedly ignored our calls for improvement and change.

“Often this means staying invested to establish a dialogue, advocate for change and exert pressure where necessary. Divestment may be a simpler solution in many cases, but it is not the way to influence long-term systemic change in an industry or sector.”

An Allianz spokesperson told The Ferret that “the world needs an orderly and just energy transition supported by all available and emerging technologies.”

They said: “As shareholders, we want to help and drive transformation of the oil and gas industry towards the net zero goal. We engage with them, we have a say in the shareholders’ meetings. 

“Divestment from oil majors will do little to address climate change. It will simply displace the problem.”

The Ferret has contacted Axa for comment. 

Photo Credit: iStock/Matthew J Thomas

The Ferret has received funding from the Sunrise Project to investigate the insurance industry’s involvement in the North Sea oil and gas industry and retains complete editorial control. The Sunrise Project coordinates Insure Our Future which is a global campaign of NGOs and social movements that hold the insurance industry accountable for its role in the climate crisis.

This article was published in tandem with The Herald.

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