California officials are asking state insurers to end their investments in coal.
Citing the declining use of coal in the energy sector, Dave Jones, the state's insurance commissioner, said that coal investments “poses a potential financial risk to insurance companies investing in coal and the carbon economy.”
“Divestment from thermal coal in particular will help protect insurance companies from holding an investment dropping in value, and which is likely to suffer substantial additional decline in value during a transition to a reduced carbon economy.”
Jones said by April he will require insurance companies disclose their investments in oil, gas and coal and use the data to assess any potential financial risk to the companies.
California has the largest insurance market in the United States, with insurers collecting $259 billion in premiums annually.
The state is among those leading the way in the divestment push, with Gov. Jerry Brown (D) signing into law last year a measure requiring public retirement funds divest their coal holdings.
The head of the state’s property-casualty trade group told Bloomberg that it was working with its members on Jones’s request.
“We appreciate that the commissioner’s approach avoids overly restrictive mandates,” Mark Sektnan, the president of the Association of California Insurance Companies, said.
“Insurers use investment income to offset repair and litigation costs to lower policyholders’ premiums. Insurers must retain the freedom to manage their investments so they can keep rates affordable for their customers."