Canadian Insurers Invest in Fossil Fuels Amid Rising Climate Risks, Says Shareholder Group

Canada's leading property and casualty insurers have poured over C$19.5 billion ($14.30 billion) into fossil fuel production, even as climate change intensifies risks for the industry, according to a report by the shareholder advocacy group Investors for Paris Compliance (I4PC).

I4PC is urging regulators to scrutinize these fossil fuel investments, arguing that they contribute to higher insurance claims and premiums. Insurers typically invest premiums from their clients and have funneled money into companies like Canadian miner Teck Resources and Imperial Oil, the report highlighted.

Previously, I4PC has called on securities regulators to investigate major Canadian banks for their climate-related claims and alleged misleading disclosures about their investments.

Extreme weather events, including wildfires in Western Canada and floods on the East Coast, led to more than C$3 billion in property claims last year, making it the fourth-highest year for insured losses in Canadian history.

According to I4PC's report, Intact Financial held C$1.48 billion in fossil fuel investments last year, which decreased to C$742 million by the end of the first quarter. In response, Intact stated that energy investments comprised about 2% of its total invested assets and reaffirmed its commitment to achieving net-zero emissions by 2050.

Desjardins, a Quebec-based credit union and insurance provider, was reported to have C$298 million in fossil fuel investments. Desjardins noted that energy loans made up 0.6% of its portfolio and emphasized its intent to continue relationships with companies committed to reducing greenhouse gas emissions.

Peer company Definity Financial also maintains fossil fuel investments.

TD Bank, a major lender and insurance seller, emerged as the largest fossil fuel financier with C$15.47 billion in investments. Fairfax, another significant player, has C$1.53 billion invested in fossil fuels and has underwritten C$809 million. TD Bank noted that the report compared the investment profiles of its entire group with those of insurance-focused companies, affecting the report's conclusions.

Insurance costs in Canada have surged due to increased risks and inflation, with home and mortgage insurance rates jumping over 73% in the past decade, according to I4PC.

The Insurance Bureau of Canada emphasized that transitioning to a low-carbon economy needs to be approached carefully, highlighting that insurers are actively collaborating with federal and provincial regulators. The bureau also mentioned the industry's efforts to partner with the federal government to launch a national flood insurance program next year, aiming to alleviate costs for taxpayers and improve insurance accessibility.