On January 25 the California Insurance Commissioner issued a press release, and also sent email messages to insurers licensed in California, indicating that he is requesting all insurers doing business in California to refrain from making any new investments, refrain from renewing any existing investments, and to sell or withdraw from existing investments, in any company that generates 30% or more of its revenue from the mining or use of thermal coal. He has asked all California-licensed insurers to respond to his request for voluntary divestment by February 24. The Department of Insurance will thereafter make public the names of those companies who commit to voluntarily divest from thermal coal and those which do not.
The California Department also plans to initiate a data call in April of 2016 that will require insurance companies that write $100 million or more in nationwide premium to disclose their carbon-based investments, including those in the extraction or use of oil, gas and coal. These required financial disclosures will be made public and will be used by the Department of Insurance to assess the degree of financial risk posed to insurance companies by their investments in the carbon based economy. The Department will be convening a conference call on March 2, 2016 with all interested parties to provide technical input on how the Department may best collect this information.
In his January 25 press release and communications to California licensed insurers, the Insurance Commissioner cited as justification for this divestment request his statutory responsibility to make sure that insurance companies address potential financial risks in the reserves they hold to pay future claims.
He noted that the movement away from coal and the rest of the carbon economy poses a potential financial risk to insurance companies investing in coal and the carbon economy. The potential risk of continuing such investments is that they lose value over time or that they lose value quickly.