Insurers Dodge Climate Costs; Fossil Fuel Should Pay

This research paper by the Center for International Environmental Law argues that private insurance companies in California are avoiding the costs of climate-driven disasters—specifically the January 2025 Los Angeles wildfires—by shifting risk to the public and the state-supported FAIR Plan, while simultaneously profiting from investments in the fossil fuel industry.

• The January 2025 Los Angeles wildfires, which killed at least 28 people and destroyed approximately 16,000 structures over nearly 50,000 acres, are expected to cause up to $40 billion in insured property damage.
• US insurance companies maintain significant financial ties to the fossil fuel industry, with over $500 billion invested in fossil fuel-related assets and top US insurers earning $5.2 billion from underwriting fossil fuel businesses in 2023.
• State Farm, the largest property and casualty insurer in California, has invested more than $6 billion in upstream oil and gas producers including ExxonMobil, Chevron, Coterra Energy, and Shell, as well as the mining company Rio Tinto.
• State Farm restricted coverage in California by refusing to renew 30,000 home insurance policies in 2023, later agreeing to renew them only if fire coverage was excluded, forcing clients to use the FAIR Plan. This included dropping approximately 1,600 policies in Pacific Palisades and over 2,000 policies across other LA zip codes including Brentwood, Calabasas, Hidden Hills, and Monte Nido.
• The FAIR Plan, California's insurer of last resort, is facing a substantial threat of insolvency due to unprecedented losses, holding 13,752 policies with over $23 billion in liability in the zip codes affected by the LA fires.
• To address the FAIR Plan's shortfall, a $1 billion assessment was levied on private insurance companies; however, a July 2024 regulation allows these companies to pass $500 million of that cost onto California's insured homeowners.
• Proposed California legislation, SB222, aims to shift the financial burden of climate disasters to polluters by directing the FAIR Plan and incentivizing private insurers to use their right of subrogation to recover costs from parties responsible for climate change-induced events.

APA

Fenlock, L., Slidders, C., & Reisch, N. (2025). Insurers Dodge Climate Costs; Fossil Fuel Should Pay. Center for International Environmental Law. https://www.ciel.org/insurers-dodge-climate-costs-fossil-fuel-should-pay/

Chicago

Fenlock, Lindsay, Charles Slidders, and Nikki Reisch. Insurers Dodge Climate Costs; Fossil Fuel Should Pay. Center for International Environmental Law, 2025. https://www.ciel.org/insurers-dodge-climate-costs-fossil-fuel-should-pay/.

Wikipedia

{{cite report |last1=Fenlock |first1=Lindsay |last2=Slidders |first2=Charles |last3=Reisch |first3=Nikki |title=Insurers Dodge Climate Costs; Fossil Fuel Should Pay |publisher=Center for International Environmental Law |date=4 March 2025 |url=https://www.ciel.org/insurers-dodge-climate-costs-fossil-fuel-should-pay/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fenlock2025insurers, author = {Fenlock, Lindsay and Slidders, Charles and Reisch, Nikki}, title = {{Insurers Dodge Climate Costs; Fossil Fuel Should Pay}}, institution = {Center for International Environmental Law}, year = {2025}, month = mar, url = {https://www.ciel.org/insurers-dodge-climate-costs-fossil-fuel-should-pay/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }