Investors for Paris Compliance’s Groundbreaking Report Exposes Industry Contradiction
HBA ‘23 Alumni Kiera Taylor was across headlines this week discussing a contradiction in the Canadian property and casualty (P&C) insurance industry: while acknowledging the severe risks climate change poses to their business, they continue to invest heavily in fossil fuels. This contradiction is highlighted in the report Playing With Fire published by Investors for Paris Compliance, lead author Kiera Taylor.
Sustainability at Ivey
Kiera Taylor, a dual-degree graduate from HBA and Climate Change & Society, has brought her passion for sustainability from Ivey to her career.
At Ivey, she co-founded the Ivey Degrowth Club, organized the inaugural Sustainability Week as HBAA Sustainability Director, served as an executive on the Ivey Social Impact Club, and co-authored a publication exposing greenwashing in Canadian university endowment funds.
During her internships, she worked across the non-profit sector, private sector finance, and gained experience on campus in grassroots climate activism. Currently, she is a Senior Analyst at Investors for Paris Compliance, a shareholder advocacy group pushing companies toward net-zero commitments.
Key Findings from "Playing With Fire"
The report reveals that in 2023 alone, the top seven P&C companies in Canada, along with their parent companies, invested approximately $19.5 billion in fossil fuel assets. Meanwhile, destruction from extreme weather events like wildfires and floods has increased across the country in the past decade. Last year, the insurance industry paid out $3.4 billion in catastrophic damages, marking the second consecutive year with claims exceeding $3 billion.
Home and mortgage insurance rates have skyrocketed by over 73% in the past decade, with even sharper spikes in regions like BC, which saw an increase of 18%. Intact, Canada’s largest property and casualty insurer and BC’s second largest, raised home insurance rates by 8% in 2023 while boosting shareholder dividends by 10%.
This is contributing towards the affordability crisis, forcing families to choose between essential expenses. Over 10,000 crowdfunding campaigns have been created in the past five years across Canada because of severe weather expenses.
A Vision for a Climate-Aligned Insurance Sector
What would a climate-aligned insurance sector look like? Addressing the fossil fuel contradiction requires decisive action from both the industry and regulators. Companies must develop comprehensive transition plans with clear targets, portfolio realignment, a focus on climate solutions, and management accountability measures to ensure progress.
Because voluntary action is unlikely to work by itself, regulators must step up. The Office of the Superintendent of Financial Institutions already regulates capital requirements for insurance companies and should use this tool to properly align incentives regarding fossil fuel investments. It should also require more specific and credible climate transition plans.
Provincial regulators also have a role in protecting consumers. They should improve public access to climate-risk data and address the short-term practice of annual risk repricing. By encouraging insurers to adopt a long-term perspective, they can help stabilize rates.
Historically, the insurance industry played a crucial role in fostering innovation and societal progress. A century ago, insurers helped facilitate the rollout of electricity by setting standards that enabled new companies to access underwriting. Today, a similar commitment is needed to support a just transition.
Conclusion
Kiera Taylor’s leadership in producing "Playing With Fire" shows the power of alumni in driving sustainability and climate accountability. The report is a clarion call for the Canadian P&C insurance industry to stop fueling climate risks and start mitigating them, aligning their practices with their climate commitments to support a just transition.
To connect with fellow alumni, join Ivey's LinkedIn Sustainability Community.
Disclaimer: The views expressed in this blog are those of the authors and do not necessarily reflect the official position of the Centre.
