Open letter: Albuquerque must address insurers’ fossil fuel risks now

Posted on 12 February 2025

As climate catastrophes intensify, 22 civil society organisations and experts call on the European Commission to urgently adopt EIOPA’s recommendations to adjust Solvency II requirements.

The evidence is clear: fossil fuel investments are riskier than previously recognised. The failure to adequately capitalise insurers against these risks threatens the stability of the entire financial system.

Despite clear warnings from EIOPA, The European Commission has failed to include a targeted review of Solvency II in its 2025 Work Programme. EIOPA’s November 2024 report found that current rules fail to adequately reflect the financial risks of fossil fuel investments. The report recommends increasing solvency capital requirements for insurers to address these risks, which are set to rise as fossil fuel assets lose value in the transition to a carbon-neutral economy.

Julia Symon, Head of Research and Advocacy at Finance Watch said:
“EIOPA’s policy recommendations are grounded in empirical evidence, providing both a foundation and an obligation for regulators to deliver on their financial stability mandate. Addressing climate risk is the only way to deliver a competitive and resilient insurance sector amid escalating climate losses. Without decisive action, the Commission’s “sustainable competitiveness" agenda is devoid of any meaning.”

Marika Carlucci, Senior EU Policy Officer at ShareAction, said:
"The European Commission cannot ignore the facts: fossil fuel investments are extremely risky and leave insurers dangerously vulnerable. Not addressing the clear evidence provided by EIOPA on these risks is not just disappointing—it’s reckless. Failing to act now leaves insurers, taxpayers, and the entire financial system exposed to mounting climate-related risks. The Commission must stop turning a blind eye and follow EIOPA's recommendations now to protect the future of Europe’s economy, and people."

Chiara Pass, Sustainable Finance Policy Officer at WWF EU, said:
“We have evidence that fossil fuel companies are the driving force behind climate change and that they are high-risk assets for insurers and investors. Neglecting to adequately address these risks according to EIOPA's recommendations is dangerous for the stability of the financial system, and directly undermines commitments made by the European Commission not long ago.”

Climate change is already reshaping the insurance market. Recent wildfires in the United States left entire regions uninsurable, while areas in Spain and France face spiralling premiums or outright withdrawal of coverage due to flood risks. Insurers are critically exposed, not only to the financial risks of fossil fuel assets but also to the physical risks of extreme weather events.

EIOPA’s recommendations ensure that insurers are adequately prepared to manage these growing risks. The Commission’s failure to act undermines its own commitments to financial stability and climate resilience.

Civil society organisations are now urging the Commission to confirm that a targeted review of Solvency II will take place in 2025. Delaying action would leave insurers exposed to mounting financial instability, with costs ultimately borne by policyholders and taxpayers.

The evidence is clear: fossil fuel investments are riskier than previously recognised.

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Open Letter to Commissioner Albuquerque

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Open letter: Albuquerque must address insurers’ fossil fuel risks now

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