NZIA says US attorneys general concerns based on ‘mistaken interpretation’ of its activities

Response by alliance to request for information notes that concerns over antitrust breaches appear to be based on mistaken understandings.

The Net Zero Insurance Alliance (NZIA) has said that concerns raised by a coalition of US attorneys general over possible violations of federal and state antitrust laws “appear to be based on a mistaken interpretation of the activities of the NZIA and its members”.

In its response to a May letter from 23 attorneys general raising concerns over whether its target setting protocol and other actions could breach national and local laws and asking a series of questions, lawyers for the NZIA said that the group and its member have been and will remain fully compliant with applicable antitrust laws.

The response, seen by Responsible Investor, says that the NZIA was established “from its inception in a manner that complies with US federal and state antitrust laws, as well as competition laws in other jurisdictions worldwide”.

The letter goes on to note that the core business of NZIA members is to identify and manage risks, including physical and transition risks. NZIA members and re/insurers who have made individual commitments have done so on the basis of “a strategic, business-driven rationale, to remain viable in the face of both competitive pressure and the increasingly frequent and expensive costs from climate-related disasters”.

Turning to the initiative’s compliance with antitrust rules, the letter explains that concerns raised by the attorneys general “appear to be based on a mistaken interpretation” of its activities, and says that the group wishes to make clear that no activity related to it constitutes an unreasonable restraint of trade.

It explains in detail the voluntary nature of membership and target setting, and highlights that in its target setting protocol members are not asked or recommended to discuss or reach agreements on individual measures or exchange competitively sensitive information. Bilateral communications between members on approaches to the target setting protocol are strictly prohibited.

“In the case of the NZIA, there is no contract, combination, or conspiracy causing the NZIA members to refuse to deal with any particular business or group,” it says.

The letter was sent by Carsten Reichel, a partner in Norton Rose Fulbright’s antitrust and competition group and former federal prosecutor in the US Department of Justice.

A spokesperson for NZIA confirmed it had responded to the attorneys general and reiterated that members had the freedom to join or withdraw at any time or for any reason.

“By participating in net-zero initiatives, insurers are further strengthening their role in protecting policyholders by protecting lives, livelihoods and assets, communities, businesses, and countries, from the devastating physical impacts of a warming planet,” the spokesperson said.

“The NZIA seeks to develop and progress frameworks for relevant and meaningful reporting of climate mitigation, adaptation, and resilience measures. The frameworks supported by the NZIA are intended to contribute to innovation and facilitation of decarbonisation in line with the intergovernmental objectives set out in the Paris Agreement (of which the United States is a signatory), as are increasingly being requested or required by stakeholders.”

Utah attorney general Sean Reyes, who was lead signatory to the letter, did not immediately respond to a request for comment outside of local business hours.

RI also obtained a copy of Swiss Re’s response to the letter. The reinsurer noted its withdrawal from NZIA on 22 May and said it had been consistent that its participation in NZIA “fully complied with applicable laws, rules and regulations, including antitrust”. The letter, sent by its general counsel for the Americas, notes that Swiss Re does not plan to answer any of the questions having withdrawn, but is responding to avoid being labelled as unresponsive.

The Net Zero Insurance Alliance has lost around 60 percent of its members since April, with some departing members citing concerns around antitrust rules. Munich Re was the first to leave, warning that “the opportunities to pursue decarbonisation goals in a collective approach among insurers worldwide without exposing ourselves to material antitrust risks are so limited that it is more effective to pursue our climate ambition to reduce global warming individually”.

The group was followed by Zurich and Hannover Re in April, while Swiss Re’s departure towards the end of May sparked a rush for the door. Canada’s Beneva, which joined in April, subsequently left again. NZIA now lists just 12 members on its website.