Hawaii resolution targets oil, gas firms to recoup rising insurance costs

In what may be a harbinger of things to come, the Hawaii legislature recently adopted a resolution encouraging property insurers to sue oil and gas companies to recoup the cost of rising insurance premiums.

The resolution calls for companies to pursue “subrogation claims against polluters who knowingly engaged in misleading and deceptive practices regarding the connection between their products and climate change.” It said the fossil fuel industry “contributed significantly to the destabilization of the state’s insurance industry, particularly in the property and casualty insurance sector.”

Insurance rates jolted by wildfires

There is no doubt about what natural disasters have done to insurance rates in Hawaii, which was severely jolted by the 2023 Maui wildfires that killed more than 111 people. Homeowners in the state were saddled with increases of tens of thousands of dollars as insurers tried to make up for catastrophic losses, estimated at more than $5.5 billion. Many policyholders were told their policies would not be renewed, forcing them into

According to the National Association of Insurance Commissioners, insurance premiums in Hawaii are still well below the national average, yet some property owners have seen increases of 1,000% or more.

Hawaii last year already became the first state in which its court classified greenhouse gases as pollutants, thus excluding the oil companies from traditional insurance coverage for claims against them. Such suits and similar legislative action by states are becoming common throughout the country as state governments and municipalities try to recover alleged damages from the toxic emissions of major oil and gas refiners.

Hawaii resolution demonstrates ‘real leadership’

“Hawaii is demonstrating some real leadership in regards to being the first legislature to go on record asking that insurers exercise subrogation claims for losses they’ve paid out due to climate-driven events and exercise those claims against it,” said Dave Jones, a former California insurance commissioner and nationally recognized expert on climate risk in insurance markets. “It’s worth noting that what’s behind this is the absence of any insurer in the United States bringing a subrogation claim against oil and gas majors, notwithstanding the billions that they’re paying in insured losses.”

Those national catastrophe losses were estimated last year at $118 billion.

The Hawaii resolution contends that increasing carbon emissions are worsening weather events, including hurricanes and droughts, and upsetting Hawaii’s climate and the insurance market. It called fossil fuel companies “responsible polluters” that have known about the impact of their products have on the climate but have sought to deflect accountability.

The Center for Climate Integrity, a non-profit environmentalist organization that advocates support of policies aimed at addressing climate change, called the Hawaii resolution “the clearest example yet of a growing political consensus that the fossil fuel industry bears financial responsibility for home insurance costs.”

Report see 50% increases in some states

A new report from the Consumer Federation of America showed insurance rates rising by 50% or more in some states, and blamed climate change for most of the increases. On average, CFA said, rates have risen from $2,656 annually in 2021 to $3,303 in 2024.

It said the most expensive states to insure a home were Florida, Louisiana, Oklahoma, Kentucky and Nebraska. In Florida, a homeowner with fair credit and $350,000 in dwelling coverage could expect to pay $9,462 a year, or $789 a month, in 2024. That’s a bump of nearly 30% from 2021, when the same policy would average $7,344.

“States are taking up the fight in many cases because people can’t afford insurance any longer,” said Danielle Fugere, the president of As You Sow, a shareholder representative that promotes environmental and social corporate responsibility. “Looking at this broadly as a national problem, there is a lot of work that states are doing to try to keep the private companies providing insurance, keeping them profitable, yet focusing on the responsible parties that have created this situation. States have to try to step in, but they don’t have enough money either. And so, it is reasonable to say, ‘let’s turn to the industry that is profiting so enormously from what is in effect a dangerous product.’ ”

Subrogation claims may become a trend

Fugere said it may become a trend for states to encourage subrogation claims against fossil fuel companies, as is being done through the Hawaii resolution.

“It has to if we want to continue to insure American homeowners,” she said. “They are not going to continue to be able to make profits insuring homes, and so we should look to the companies that are causing a significant amount of this damage.”

As You Sow this year was behind a shareholder resolution for Travelers to reveal more information on the effect of its climate-related pricing and coverage decisions and how those decisions may affect its future business. The shareholders want the proposal added to the company’s 2025 proxy statement and brought to a vote at Traveler’s annual meeting, expected next month.

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