Pressure mounts on insurers to sue oil companies as Scotus hears climate lawsuit

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Insurers should subrogate climate losses, not defend the fossil fuel industry, critics say.

Insurers have aligned themselves with oil companies ahead of a key US Supreme Court climate change hearing, but advocates and lawmakers are exerting pressure on the industry to switch sides and consider filing their own cases against fossil fuel firms.

On Monday, the high court will consider Suncor’s and ExxonMobil’s arguments that Boulder, Colorado’s climate deception lawsuit is preempted by federal law. A finding on the side of the oil companies would likely lead to dismissal of the case and others like it seeking billions in damages related to climate change.

So far, the insurance industry has aligned itself with the oil and gas industry via briefs supporting its legal theories. But there is a growing chorus of critics who wonder why an industry paying out increasing climate-fueled catastrophe claims aren't themselves suing the oil and gas industry to recoup those losses.

“I think the insurers picked the wrong side,” Dave Jones, the former insurance commissioner for California, told Insurance Insider US.

A long road to the Supreme Court

Boulder’s road to the Supreme Court began in 2018, when it filed a lawsuit as a part of a wave of cases by cities, states and local governments that wanted to force the fossil fuel industry to pay for its alleged contributions to climate change.

While individual consumers and businesses ostensibly make their own decisions on whether to use oil and gas, the lawsuits broadly argue the fossil fuel industry intentionally misled the public about the impacts of that behavior and secretively orchestrated campaigns to undermine policies to develop climate-friendly alternatives like electric vehicles.

As a result of climate change, communities like Boulder are facing increased costs as they build wildfire-resistant infrastructure and respond to the related increased respiratory illnesses from smoke.

Coastal communities, meanwhile, are shelling out billions of dollars to build sea walls, while their buildings are being destroyed by more severe hurricanes.

The insurance industry is often footing the bill after hurricanes or other natural disasters, however. Billion-dollar weather events now occur once every 11 days on average, and growing claims severity has spurred insurers to restrict or pull back from cat prone areas like Louisiana, California and Florida.

An example of climate’s impact on losses: Scientists have estimated that climate change made the conditions that fueled the Los Angeles wildfires in 2025 about 6% more intense and 35% more likely to occur. Swiss Re has estimated the fires caused a record-high $40bn in insured losses.

Insurers “write a lot more insurance for and collect a lot more premium from homeowners and small business property owners than they do from the fossil fuel industry,” Jones said.

“So, I think it was a big mistake, and I think that it's one that is at cross purposes with their own economic interests.”

Michael Gerrard, a legal scholar at Columbia Law School and expert in climate law matters, said that a decision against Boulder at the Supreme Court could effectively block the insurance industry from subrogation claims over climate damages in the future, should carriers ever change their mind.

“A subrogation claim would be a state law claim, so I think that the result of this case will also fundamentally affect the future of subrogation claims,” he said.

The industry’s supportive position behind oil companies is built on the logic that exposing their clients to greater liability would make them less insurable.

The insurance industry’s amicus brief in the Boulder case argued that imposing liability on fossil fuel firms for harms from greenhouse gas emissions would make it difficult for the energy sector to get insurance.

“Clear and predictable rules governing climate related liability are important to insurers and the energy sector, and to society as it balances a reliable energy system with environmental protection,” the brief said.

Backing the brief were the American Property and Casualty Insurance Association of America, the Reinsurance Association of America and the Complex Insurance Claims Litigation Association.

But sources note that as attribution science evolve, that stance may run counter to what’s best for carriers and the broader economy.

Scientists have expressed a relatively high degree of confidence that climate change is making extreme heat, cold events, heavy rainfall and hurricanes worse.

There is less confidence around severe convective storms and tornadoes, since there is less observational data, and they are impacted by smaller meteorological processes that are difficult to model.

Exclusions and aggressive coverage litigation

The industry has for decades excluded pollution liabilities from commercial general liability policies.

After the federal government passed laws establishing liability for historic pollution in the 1970s and early 1980s, insurers first interpreted policies to exclude sudden and accidental pollution, before developing more robust exclusions that more broadly protected insurers from the claims.

In recent years there have been a growing number of coverage disputes between oil companies and insurers that have been filed related to the climate litigation, but only one substantive ruling has resulted.

The Hawaii Supreme Court ruled in October 2025 that insurance companies have no duty to defend fossil fuel companies against climate change lawsuits in the Aloha Petroleum v National Union Fire case.

Joseph Jean, a coverage dispute lawyer and partner at the law firm Pillsbury, said he expects “to see insurers take aggressive actions through all the policies, whether it be the post-1980 policies with absolute pollution exclusions or the pre-absolute pollution exclusion policies.”

He added: “We can expect aggressive tactics that drive up the cost of the litigation and delay the ultimate resolution of cases.”

The subrogation pressure campaign

So far, the push to convince insurers to try and recoup catastrophe losses from oil and gas firms has been contained to a handful of Democratic-led states.

Lawmakers in Hawaii, New York and California have expressed support for measures to enable property insurers to sue oil and gas firms over climate-related harms, though the measures have failed to become law.

Sources expect that campaign to continue into coming legislative sessions, and that increased global temperatures and natural disasters will continue to add momentum.

The insurance industry, for its part, has not shown interest in supporting those types of lawsuits.

To the contrary, the industry has modified its stance in recent years to be more friendly to energy companies on environmental issues – relaxing restrictions on writing policies for polluting industries like coal power plants or mines, while continuing to write cover for methane gas export plants in the Gulf.

Those relaxed restrictions have come as the Trump administration has very vocally pushed for more oil, gas and coal development in the United States in order to meet a global and domestic energy shortage that has been exacerbated by major wars in Ukraine and the Middle East.

Also driving up energy consumption is the blitz of data center building projects, which has given insurers ample new business opportunities over the past year.

The insurance industry may also have other conflicts of interest that could be holding it back from suing oil and gas firms over climate damage. Reporting from The Wall Street Journal in 2024 indicated that 4.4% of the insurance industry’s investment portfolio lies in fossil fuel companies, up from 3.8% nearly a decade ago.

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By Clark Mindock
2 October, 2026

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