Sustainability and Insurance: March Roundup
April 2, 2025
Welcome to our monthly roundup, keeping you up to date on the insurance industry’s most significant sustainability-related news. This month’s topic: What do Trump’s first moves in office signal for insurance and sustainability?
Read our summaries and analysis below.
Analysis
What do Trump’s first moves in office signal for insurance and sustainability?
Within the first hours of his second term as President of the United States, Donald Trump signed several executive orders marking a significant shift in US environmental policy.
This term is different to his first. Trump entered the White House following a convincing electoral victory, emboldening his approach to policy change. We saw a push to move quickly, overturning executive orders from the Biden administration and ensuring changes are in motion ahead of mid-term elections in 2026, when Republican control of Congress could wane.
Energy was central to Trump’s campaign – having promised in his second inaugural address to ‘drill, baby, drill.’ Regulatory changes focus on growing domestic energy production from conventional fossil fuels. Declaring a ‘national energy emergency’ empowers federal agencies to expedite energy infrastructure projects, including those which were restricted under the Clean Water Act and Endangered Species Act. The ‘Unleashing American Energy’ executive order promotes exploration of energy resources including oil, coal, critical minerals and nuclear energy.
Similarly, we may see changes in the energy mix. The administration has temporarily halted leasing for wind energy development on the Outer Continental Shelf and is reviewing permissions for onshore and offshore wind leasing practices. Given Elon Musk’s interest in renewable energy and the potential for competition with China around emerging energy opportunities, the trajectory of the energy mix is still up for grabs.
As we reported in a previous newsletter, these energy policies are likely to shift the dial and reshape (re)insurers’ energy portfolios in the US, especially for those companies without exclusions on the types of energy projects they will insure or reinsure on a facultative basis. Bigger energy projects might take years to go live but will be engaging (re)insurers and risk managers much sooner.
The second key area of change is the role of the US on the global stage. For international environmental agreements, Trump has ended financial commitments under the United Nations Framework Convention on Climate Change, initiated the process to withdraw from the Paris Agreement (as during his previous term), and terminated the US International Climate Finance Plan.
These actions do not come as a surprise but still signify a big hit to global climate cooperation. Given that the US is the second largest carbon emitter, its withdrawal has left many nations looking to adjust their strategies and adapt those that relied on US leadership or finance.
For (re)insurers, Trump’s approach to risk management is especially interesting. Under the Biden administration in 2021, federal agencies were ordered to publicly report the risks posed by climate change to government operations (and their progress to address these risks). Trump rescinded this order, such that agencies no longer have to research their exposure to climate change or take action to address it. We may see knock-on effects on the demand for insurance in areas at greatest risk of climate disasters.
The national and global scales are not the only ones that matter, however. At the state, city and business level we are still seeing commitments to the transition. For example, the America is All In Coalition, representing states accounting for almost 60% of the US economy, have committed to continue pushing for emissions reductions.
While our eyes are on the United States, disclosures and reporting continue to increase in parts of Europe, for instance with updates on disclosure requirements in Switzerland (discussed below).
Overall, there are major headwinds to the pace and trajectory of the energy transition. It is still happening both within and outside of the United States, albeit perhaps slower than before.
Summary
Los Angeles Wildfires
LA fires: Average insured claim estimated at $1.9m with 17,027 structures destroyed or damaged (Reinsurance News)
At the start of this year, wildfires destroyed communities across Los Angeles. Initial estimates from catastrophe risk modellers suggested total insured losses of approximately $30 billion, with more than 17,000 structures having been damaged or destroyed. Many insurers have exited the high value, wildfire-exposed homeowners’ market in California, leaving policyholders reliant on the insurer of last resort, the California FAIR Plan (which caps residential coverage at $3 million). It is not yet clear how much exposure will be picked up by reinsurers, given that reinsurers have generally lowered their exposure to secondary perils like wildfires in the last couple of years.
Some Insurers Pledge to Ease Burden on L.A. Fire Victims, but Others Say No (New York Times – subscription required)
Last month, California’s state insurance regulator requested that companies pay up to 100% coverage without the requirement for a full inventory of objects in homes destroyed by the Los Angeles wildfires. This builds on a law passed in 2020 requiring insurers pay 30% of the policy without the need for itemisation. At the time of writing, the majority of companies in the state have agreed to pay at least 75% contents coverage. Notably, State Farm, the largest home insurer across California, was among those companies that declined the request.
Regulation & disclosure updates
Switzerland to require companies to disclose 2050 aligned net-zero roadmaps (ESG Today)
The Swiss government are in consultation about updating their regulation around sustainability-related disclosure to include a requirement for companies to publish plans aligned to the country’s net zero by 2050 climate target based on global standards such as the International Sustainability Standards Board (ISSB). Existing laws which came into force last year already require large Swiss companies and financial institutions to report on climate targets and transition plans. The amendments, which are set to take effect at the start of 2026, would further align Swiss law with international standards and expand the number of companies covered by the requirements.
ESG round-up: Germany’s Scholz calls for two-year delay to CSRD (Responsible Investor)
German chancellor Olaf Scholz wrote to the president of the European Commission, Ursula von der Leyen, outlining several suggestions to reduce bureaucracy in the European Union. One of these builds on the suggestion of German ministers who wrote to the Commission previously, suggesting a two-year delay to the Corporate Sustainability Reporting Directive (CSRD). In addition, Scholz called for a change in CRSD’s thresholds for employee count and balance sheet so that fewer companies are subject to its requirements.
Canada’s CSSB Releases IFRS-Based Sustainability and Climate Reporting Standards (ESG Today)
Marking a significant step towards mandatory sustainability reporting in Canada, the Canadian Sustainability Standards Board (CSSB) published its finalised Canadian Sustainability Disclosure Standards. The CSSB was set up to support the uptake of the IFRS Foundation’s International Sustainability Standards Board (ISSB) in Canada. The Canadian Standards are mostly aligned to those of the ISSB, however with more time to allow companies to prepare. For example, the period before requiring Scope 3 emissions reporting on matters beyond climate has been extended to 3 years.
New platforms, partnerships & products
Mosaic Insurance introduces environmental product (Insurance Business UK)
Mosaic Insurance have introduced a new Site & General Liability (SGL) product combining primary commercial general liability with pollution and professional coverage. The product is available to retail and wholesale brokers and has $25 million in excess capacity. It aims to address gaps in the current market provisions by offering broader coverage than standard casualty placements.
Howden’s new platform targets renewable energy risks (Insurance Business UK)
Howden’s Power & Renewable Energy team have announced the launch of a new UK quote and bind platform for their retail network. It aims to make it easier for clients to access construction and operational insurance for renewal energy products. The platform is backed by Lloyd’s and offers up to £100 million per declaration capacity for UK renewable energy clients.
Tierra announces new partnership to support global energy transition efforts (Tierra Underwriting)
MGA Tierra Underwriting Limited have announced their partnership with Everest Insurance International. Tierra currently offer long-term credit insurance to finance green projects, providing cover for around 20-30 projects per year which are aligned with the ambitions of the Paris Agreement. This new partnership will provide additional underwriting capacity.
Insurance for electric vehicles
Push to remove EV insurance tax gathers momentum (Insurance Business UK)
Pressure for the UK government to consider scrapping or reducing Insurance Premium Tax (IPT) on car insurance for electric vehicles (EVs) is growing. Labour have committed to the ban on the sale of new petrol and diesel cars by 2030, making the need for affordable EVs even more urgent. According to research from the Green Insurer, 36% of motorists would be more likely to switch to EVs from petrol or diesel vehicles if the IPT were removed.
About the author
Anna Gardner is a Consultant at Oxbow Partners who has worked on strategic engagements. She recently supported the design and implementation of a follow-only strategy for a global specialty insurer and writes about sustainability for Oxbow Partners’ publications. Anna has a particular specialism in carbon credits, having previously advised a provider of high-quality carbon credits on their communications strategy and led a delegation to the UN climate change conference at COP27. Anna holds a Masters degree in Geography from the University of Cambridge.
