A new proposal in the New York State Legislature would ban insurance companies from doing business in the state if they insure businesses that derive more than 10% of their revenue from fossil fuels. However, the bill could backfire by encouraging insurance companies to leave New York entirely rather than leave this lucrative industry.
“Within five years from the effective date of this section,” bill According to the regulations, “the Director shall require any insurance company doing business in the state to certify that they have divested from “any company that derives 10 percent or more of its revenue from exploration, mining, processing, exporting, transportation and any other significant operations.” Oil, natural gas, coal or any by-products thereof.
Additionally, the law would force insurance companies to divest any project “Aimed to promote or expand” any “significant action relating to oil, gas, coal or any by-products thereof.”
New York is not the only state currently trying to impose backdoor restrictions on fossil fuels by blocking insurance companies. Since last year, the Connecticut Legislature argued A proposal to charge insurance companies for fossil fuel plans.
The legislation is designed to weaken fossil fuel companies by cutting their funding. The state’s bill threatens insurance companies for potential fossil fuel projects, such as pipeline construction and natural gas power plant production, by shutting them out of the state’s economy.
“There is no real magic bullet to stop the oil and gas beast,” said Pete Sikora, climate director at Communities for Change in New York. Tell new york focus“But to the extent that it exists, it may be insurance…Without insurance, there is no project.”
“Insurance is a very powerful stick,” Add to State Sen. Brad Holman-Siegel (D-Manhattan), one of the legislative sponsors of the proposal.
New York 2024 Legislative Session Summarize June 6, meaning the bill cannot pass before the start of the next legislative session in January 2025.
If the bill is successful, it will increase the cost of insuring energy production and could result in projects continuing without insurance.
“The scarcity or unavailability of insurance for fossil fuel-related projects will not prevent these projects from moving forward; it will only prevent them from continuing to enjoy the critical protections provided by insurance,” said Dave Snyder, vice president of the American Property Institute. ” Casualty Insurance Association (APCIA), in comments reason.
New York’s Securing Our Future Act could also be completely counterproductive, given the ubiquity and profitability of fossil fuels. It gives insurance companies a choice: Leave the fossil fuel industry or leave the country. Many companies may choose the latter.
While New York lawmakers may think fossil fuels are a thing of the past, perhaps belonging to less happy times gas stove Still legal – they’re here to stay, at least for now. Fossil fuels account for More than 80% U.S. total energy and 60% Our electricity. According to some estimates, oil and gas will include 60% Total energy consumption in the United States by 2040.
This makes fossil fuels a lucrative business for insurance companies. According to statistics, Northwestern Mutual, New York Life Insurance Company, State Farm and six other companies each invested more than $10 billion in fossil fuels in 2019 data Prepared by the California Department of Insurance. united insurance company invest According to one person, the industry is worth over $500 billion a year, and they’re making a ton of money. estimateBy 2022, the industry’s revenue will exceed $21 billion.
Many companies may decide that it is more important to stay in the fossil fuel industry than in the Empire State, and if they do, it will be New York businesses, not fossil fuel companies, that will bear the brunt of the law.
But this all assumes that the sponsors of the proposal actually intend to get the bill passed in the Legislature and are not just trying to make a political statement that they are willing to double down on climate change.
“Even in the rather ‘woke’ atmosphere of the Albany Assembly, I can’t imagine that happening,” said John C. Coffee, a professor at Columbia Law School. reason About the bill. “If it does, it could still face a veto from the governor.”
The bill’s two legislative sponsors, Hoylman-Sigal and state Rep. Phara Souffrant Forrest (D-Brooklyn), did not immediately respond. reasonRequest for comment.
