The investigation aims to find out how major insurance companies in the US examine climate-related risks. Credit: cocoparisienne from Pixabay.

Members of the US Senate Budget Committee have commenced a probe to find out the ways used by major insurance firms in the country to assess climate-related risks.

The inquiry will also probe the way how these companies take decisions on investment or underwrite fossil fuel extension projects that fuel such risks, as well as price insurance policies on such projects.

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The committee has sent letters to AIG, Berkshire Hathaway, Chubb, Liberty Mutual, Starr, State Farm and Travelers to reveal reasons and plans for their continuous backing for underwriting and investment in new and extended fossil fuel projects.

It has also asked the companies to disclose information on their plans to pursue the path of their global peers, some of whom have already started limiting their underwriting of fossil fuel projects.

The firms were further asked to reveal their plans on offloading their investments in fossil fuel-related projects, the practice they use to examine their investment and underwriting decisions that impact the climate in future and others.

In addition, the senators requested data regarding the responsibilities of the insurers towards Free, Prior, and Informed Consent, which allows indigenous peoples to give or deny permission for any act that would impact their lands, territories or rights.

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The investigation comes at a time when several insurance firms are starting to restrict their coverage or fully withdraw from the markets because of their evaluation of future ‘catastrophic risk’ driven by climate change.

The committee has asked the seven insurers to provide information and internal documents by 16 June and 23 June, respectively.

Senate Budget Committee chairman Senator Sheldon Whitehouse along with senators Ron Wyden and Bernie Sanders are part of the group that launched the probe.

Whitehouse said: “Any new fossil fuel expansion is incompatible with our climate goals and economic stability.

“By underwriting and investing in new and expanded fossil fuel projects, US insurers are helping Big Oil bring us closer to the worst runaway climate scenarios, which threaten lives, livelihoods, and the federal budget.”