Insurers vs Climate Change vs US Legislators/Regulators

An article in today’s WSJ might be of interest to some (non-paywalled link):

Nothing terribly earth-shattering in the article to some of us, but it’s interesting seeing the headache a few of us have to deal with getting mainstream media attention.

At the end of the day rates are based on predicting expected loss, less thumb on the scale based on political aims. Where that comes into play is really more senior than that, for example having a policy to not underwrite coal companies.

I’ll of course slip in that California is the only state in the country where it’s unlawful to include climate change in your rate analysis.

While the link between rates and expected loss cannot be denied, when you start getting into the insurance implications of ESG you start reaching questions like “should we exclude certain operations from underwriting eligibility?” or “should we sacrifice some optimality in our investment portfolio because of social considerations?”

I can’t see regulators intervening too much on the investment side, but I can see politicians in places like Texas or North Dakota being hostile to carriers that seek to exclude the fossil fuel industry with their underwriting guidelines.