In this series, the Gallagher Research Centre (GRC) talks to academics and innovators whose work has had a profound impact on the reinsurance industry.

In the latest interview, Dr Joana Setzer from Grantham Research Institute (GRI) on Climate Change & the Environment and Senior Broking Associate Sam Asari at Gallagher Re discuss the rise of climate litigation, what trends we are beginning to see worldwide, the risks it may pose to (re)insurers, as well as the potential opportunities it brings to the sector.


You've been involved in climate legislation and policy at GRI for a while, even before it gained significant attention in the news and business discussions. Could you please share the origins of this research and how it evolved into your current work in climate litigation?

Joana Setzer: In 2010, I began my PhD at the London School of Economics (LSE) when GRI was just starting up. Around this time, the Global International Network of Legislators approached GRI, seeking assistance in understanding which countries were enacting climate change legislation. Despite originally pursuing my PhD in geography, I became involved as a research assistant on this project due to my background in law. The first report covered 16 countries with climate laws at that time, and now the online database encompasses over 5,000 pieces of global legislation.

Over time, as the number of climate laws proliferated, it felt like only a matter of time before climate litigation cases would start going to court.

By then I had finished my PhD, so my postdoc question became obvious. I got in touch with the Sabin Center for Climate Change Law at Columbia University, which had a database of climate litigation, and we started a collaboration around Sabin's litigation database and GRI's database of climate change legalisation and policies. It was perfect timing as I officially started in 2015, just as the whole climate litigation movement started to gain momentum, particularly due to the Paris Agreement.

The rise of climate change litigation

The Sabin Center for Climate Change Law at Columbia University defines climate litigation as "cases brought before judicial and quasi-judicial bodies that involve material issues of climate change science, policy, or law."

In the last 20 years, the number of cases of climate litigation has risen dramatically. There are several drivers of this increase, with 2015 being considered a turning-point year for climate litigation. This was the year of signing of the Paris Agreement and the first instance ruling in the landmark Urgenda v. State of the Netherlands case, where a domestic court ordered a state to reduce emissions by an absolute minimum amount for the first time. Developments in the scientific literature, and in climate attribution science, as well as the consolidation of and consensus around the credibility of IPCC research, have helped accelerate this wave.

Figure 1: Climate litigation cases US vs Rest of World, 1986 — 2023. Based on data from the Grantham Research Institute Global Trends report.1 The primary sources of litigation data are the Climate Change Litigation databases, maintained by the Sabin Center for Climate Change Law.2

Factors influencing the global increase in climate litigation cases, pre and post 2015

  • US focus — Cases were highly concentrated in the US.
  • Dealt largely with regulatory issues — Cases weren't used for strategic purposes.
  • Increasing climate legislation — New laws requiring reductions in the emissions of GHGs alongside increasing transparency in disclosures put greater pressure on companies and governments.
  • Growing awareness — People have increasingly become aware of climate change as a 'climate crisis' and feel that existing solutions are insufficient. Litigation is thereby used to push companies and governments to move more quickly and with more ambitious targets.
  • Improved climate attribution — There is improved ability to provide scientific evidence in cases. As climate science and data becomes more sophisticated, and evidence clearer, plaintiffs can more successfully attribute specific events or inaction to real climate change impacts or damages.
  • New goals for climate litigation — Activists and organisations use litigation more strategically to achieve different goals. Rather than financial compensation, it's often used as a tool to enact policy changes in best case scenarios or, even if it's unsuccessful, can increase awareness of the problem, improve communication of the science, and drive more activism.
  • More success — There have been some precedents that have been successful that are covered by the media, which sparks similar cases around the world. People feel if it can happen in other jurisdictions, why not in their own country.
  • Increasing regulatory requirements and legislation — National and international laws around climate risk and requirements have provided a framework to enable climate litigation cases to be brought, coupled with increasing regulatory focus, including in the financial services sector from the Bank of England's Prudential Regulatory Authority, EOIPA and more.
  • Increasing awareness of the largest emitters — Seminal scientific research such as the Carbon Majors Database3 established in 2013 by Richard Heede, which listed out the top carbon emitters by historical emissions, was a catalyst for litigation, allowing plaintiffs to target corporations based on the number of emissions they have produced.

When did we first start to see this type of litigation on the (re)insurance radar?

Sam Asari: Surprisingly, I think it goes back to when Joana's team first investigated this.

Many papers have been written on the implications on the insurance industry, as well as potential coverage disputes between policyholders and insurers, including one from the American Bar Association in 2018, which looked at the changing landscape of climate change coverage under general liabilities policies. Evidently, there has been some awareness for a while.4

More recently, however, its prevalence has increased as regulators, such as the Bank of England and several global insurers, began considering the potential impact of this type of litigation on their balance sheets. Additionally, it has been consistently identified in the Emerging Risk Radar from the Chief Risk Officer Forum.5

Climate activist funding spotlight

In recent years, activist funders have played an increasingly pivotal role in financing climate litigation cases, aiming to drive systemic change and advance environmental policies addressing climate change. Plaintiffs in climate litigation cases include governments, consumers, individuals, and shareholders.

Correspondingly, climate litigation plaintiffs continue to receive growing support from an amalgam of activist funders, comprising philanthropic groups, charities and third-party investors dedicated to litigation funding. These funders have various motivations, such as seeking faster action by governments and corporations on climate change, challenging inadequate climate policies and insufficient environmental regulations, and holding companies accountable for their contribution to climate change.

Since the 2015 Paris Climate Accord, climate litigation cases have proliferated globally, with cases filed in courts from Australia to Europe. These cases span various categories, including greenwashing, demands for greater climate disclosures, addressing corporate liability for climate harms, and challenges to non-enforcement of climate-related laws.

The use of litigation as a strategic tool extends beyond seeking financial compensation; it aims to influence policy outcomes, change corporate behaviour, and shape public discourse.

Notably, high-profile cases like "Luciano Lliuya V. RWE AG," where a Peruvian farmer is suing a German energy utility for contributing to the melting of Andean glaciers, underscore the potential of climate litigation to set significant precedents and propel broader shifts in environmental accountability and responsibility.

Figure 2: Google data on "Climate Litigation" searches, 2015-2024.

It appears that there is indeed awareness of this litigation within the insurance sector. Do we observe this awareness translating into concrete actions or responses?

SA: There were a few big cases regarding coverage under general liability policies that have made it to court, although there haven't been any significant losses to date, which I think is partly the reason why we haven't seen strong action from the industry just yet.

For example, AES, a big utilities company in the United States, litigated against its insurer for coverage of climate change actions under their policy, while the insurer contended that it was an exclusion. The case went up to the Supreme Court of Virginia, which ruled that climate change harms shouldn't be covered under the policy.

There are similar cases with Gulf Oil6 and Aloha Petroleum7 against their respective insurers, which are still ongoing or have had been settled out of court.

Nevertheless, important to note that the absence of such losses does not guarantee that these cases won't be successful in the future.

Considering the trends in climate litigation, we have mainly observed a dominance of US cases thus far. Does GRI anticipate this phenomenon becoming more global in scope?

JS: Historically, the US still represents most cases and is a country where litigation will remain significant. However, we're now seeing interesting trends within the US, for example with cities and regional governments bringing compensation claims against Carbon Majors and at the same time dealing with the implementation of climate policies.

Meanwhile, there are more climate litigation cases arising in countries where it was previously almost non-existent. In addition, at the international level, there are cases being brought before international courts, like the International Court of Justice, and investor-state dispute settlement mechanisms are increasingly handling climate related cases.

We're also seeing that countries with existing climate legislation are experiencing an increase in climate litigation cases, not just in numbers but also in scope, case type, and litigation strategies.

Figure 3: Global occurrences of climate litigation cases by country, 1986 — 2023. Data is taken from Global Trends report1 and the Sabin Center for Climate Change Law2

Other trends are also emerging, such as increasing divisions per sector. Is this something we anticipate seeing more frequently?

JS: Absolutely — you've not just got cases brought against fossil fuel producers, but we're seeing cases against food manufacturers, automobile and airlines companies, as well as financial institutions.

And this latter sector is interesting. Everyone knows that fossil fuel companies are big emitters, so it is understandable that litigators would go after those first. But now we're seeing more nuance in terms of who is responsible. It's obvious which companies emit, but who is financing and insuring them?

And beyond just carbon emissions, we're seeing more cases against greenwashing, which can affect all sectors. Increasingly, companies are announcing that they are net zero, and carbon neutral, but consumers are keen to hold them accountable.

Figure 4: Climate litigation cases by industry sector, 2015 — 2022. Data is taken from the Grantham Research Institute Global Trends report1 and the Sabin Center for Climate Change Law2

Other types of cases we're seeing are against corporate directors and officers, where specific individuals are being litigated against for their role in their company's climate impacts.

Speaking of D&O and professional liability, is this something we expect to see more of in climate litigation?

JS: Yes, I think it is something to expect, and there are several reasons for that from the litigant's perspective, in terms of strategy.

It's a well-known phenomenon that people and decision makers, are often more responsive if they are personally liable than if a company is just liable. No individual wants bad publicity.

As a result, plaintiffs are beginning to use this strategy in their litigation plans.

Moreover, shareholder activism has been growing in recent years, wherein activists buy shares in a company and then proceed to bring litigation as shareholders. This happened with Client Earth, an NGO, in several cases against directors who shareholders felt were not adequately managing climate risks.

It remains to be seen how the insurance sector will respond to climate risk for directors and officers, as D&O cases related to climate change have not seen huge successes so far. However, if precedents are set in future cases, it could lead to even more scrutiny of D&O actions, including potential questions for insurance coverage.

In turn, if insurance coverage is not available for this risk, or if premiums rise significantly for coverage, companies may begin to reassess how they make climate risk decisions.

From an insurance standpoint, there seem to be two potential paths. Either premiums rise to accommodate the new climate litigation risk, or insurers withdraw from covering it altogether. Is there a sense of whether this could eventually become something deemed uninsurable?

SA: If we stopped insuring all the carbon majors, there'll be a significant loss for the industry and also the private sector as well. But there is also the question surrounding whether insurance companies continue to support these heavy emission emitting companies, and we're trying to figure that out.

It's not a one-size-fits-all solution, and I think there'll be a lot of struggles in the coming years to find what works for the industry and the policyholders as well.

Obviously, we are seeing significant victories in cases involving governments. However, do you foresee the success of climate litigation cases expanding into the private sector and a tipping point there?

JS: Indeed, high profile cases against governments have been relatively successful. If we look at cases that have made it all the way to the Supreme Court, where there is no further appeal, seven out of nine cases recorded received climate aligned decisions.

When recording non-US cases in our database, we also look at whether the case is aligned with climate protection. For the countries where we do that, we found that 55% of cases result in outcomes that are aligned with climate protection.

This perception of lower success rates is often due to high-profile cases against corporations, which have been less successful in the traditional sense. However, a loss is not always a complete defeat in strategic litigation, which we refer to as 'failing with benefits.' Even if a case is lost, the plaintiff can still manage to bring about change. For example, a company might cease advertising, implement mechanisms to improve reporting, or simply raise awareness on an issue. Thus, litigation can bring about change without necessarily winning the case.

In the future, an area we may see more of a shift is with high profile cases winning compensation, not just strategic wins. This has been tried mostly in the US, but we're now seeing examples abroad. For example, in the case of the indigenous Peruvian farmer, Saúl Luciano Lliuya, who has brought a lawsuit8 against German energy company RWE AG to cover the costs of protecting his hometown against flooding from the glacial Lake Palcacocha. RWE AG was identified as one of the major emitters in the Carbon Majors Database we discussed earlier, and Lliuya is suing for the proportional costs of flood prevention.

Additionally, four residents from Pulau Pari, an island in Indonesia, are bringing a case9 against Holcim, a Swiss cement group, which mirrors the rationale in Luciano Lliuya vs RWE AG: plaintiffs aim to hold Holcim liable for its global emissions identified in the Carbon Majors Database3, seeking compensation for climate damages from sea level rise and flooding.

And what could a tipping point look like in the insurance sector?

SA: It's worth noting that even if corporate cases remain unsuccessful, defence costs alone can be extremely high, especially for high-profile cases — costing $3 million USD on average. So, even without losses from compensation, there is risk for insurers in terms of accumulation of defence costs if more of these cases arise.

This is where we're starting to see more questions arise about policy exclusions and litigation for this, including the Gulf Oil, Aloha Petroleum and AES Corp cases mentioned earlier, which all focus on whether the insurer in question is required to cover these corporations for climate change impacts because of their actions.

However, even though many of these cases are in favour of insurers and not requiring them to cover corporations against climate related losses, it still requires significant money and resources on the insurer's end to investigate clams, hire loss adjusters, hire legal counsel and so on.

(Re)insurers could also become more exposed to claims under occurrence-based GL policies that were written years ago, some of which may not have an adequate pollution exclusion. Retrospective reinsurance cover, such as Loss Portfolio Transfer (LPT) and Adverse Development Cover (ADC), can help remove such legacy exposures from affected balance sheets, but it's something we may see more of in the future.

So, I don't know when and how the tipping point will come, or even if it will, but I expect we will see considerable focus on insurance pricing from these cases because of the defence costs and in claims adjustment costs.

Climate litigation — insurance policy exclusions

The discussion on policy exclusions in claims is crucial, especially regarding the interpretation of what constitutes an "event" by (re)insurers. This interpretation determines if an event qualifies as an unforeseen occurrence or something expected. This distinction is vital in liability insurance, which includes claims-made and occurrence-based policies.

Claims-made policies activate upon claim filing, while occurrence policies activate upon event occurrence. For example, Directors' and Officers' (D&O) and Professional Liability insurance typically operate on a claims-made basis. In occurrence-based policies, defining the occurrence can be complex, especially in global warming litigation. Determining if emission events, damage occurrences, or warming exacerbations trigger coverage adds complexity. The issue is further compounded by the potential for multiple occurrences coming from a single event or related to climate change.

The ambiguity in defining an occurrence leads to diverse interpretations among experts. Resolving this challenge requires careful consideration of specific litigation policies, as each may have different criteria. Addressing this necessitates a nuanced understanding of liability insurance policies and their application in climate litigation.

What is your perspective on how the insurance industry is responding to the increasing number of climate cases?

JS: The insurance industry is demonstrating a greater level of awareness and responsiveness compared to many other sectors. This prompts the question: why is this the case? I think there are several factors contributing to this, such as the Climate Biennial Exploratory Scenario (CBES), initiated by the Bank of England, which included assessing litigation risk within the insurance sector. Additionally, organizations like the Geneva Association conduct studies that directly engage with regulators. Furthermore, numerous insurance companies have established their own expert groups, inviting stakeholders to contribute to their processes.

Finally, does climate litigation pose any opportunities for insurers, and not just risks?

SA: For a broker, such as one at Gallagher Re, there's an opportunity to provide risk advisory services that can help clients look at an insurance portfolio and identify potential red flags, including identifying potential claims from fossil fuel pieces, for example.

And that's exactly what I'm doing for some of our major clients already. I even presented the results to the board members in the first year of the service, which, for me, shows the level of their interest in this topic.

It also provides opportunities for developing new programs and products to help with reinsurance placement and transaction, whether it's retroactive insurance for carbon major heavy portfolios, or thinking about alternative financing through things like carbon credits to help manage this risk in new ways.

The Climate Litigation Quarterly

In The Climate Litigation Quarterly, Gallagher Re and Gallagher Research Centre experts collaborate with Grantham Research Institute academics to provide a quarterly update on evolving landmark legal cases and what precedents these cases could have for the insurance industry.

To request your copy of the briefing, email the GRC team.

How can we help?

Please contact our Gallagher Re Financial and Professional Liability Reinsurance team to learn more about how our team can help you to assess and manage ESG risk, including climate litigation.

The Gallagher Research Centre (GRC) is a global network of academic partnerships dedicated to connecting world-leading research with the needs of the (re)insurance industry.


1Setzer, Joana and Catherine Higham, "Global trends in climate change litigation: 2023 snapshot," London: Grantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy, London School of Economics and Political Science. June 2023. PDF File.

2"Climate Change Litigation Databases," Columbia Law School, Columbia Climate School, Sabin Centre for Climate Change Law.

3"Carbon Majors Dataset 2020," Climate Accountability Institute, 2020.

4Dr. Lamden, Seth. "CGL Coverage for Climate Change — Related Civil Litigation," The Brief, Volume 48, Number. Fall 2018. PDF file.

5"Emerging Risk Radar 2023," CRO Forum, 31 July 2023

6"Conservation Law Foundation v. Gulf Oil LP," Climate Change Litigation. Updated: 10 July 2023.

7"Aloha Petroleum Ltd. v. National Union Fire Insurance Co. of Pittsburgh," - Climate Change Litigation. 9 October 2023.

8Elfar, Aliyah. "Landmark Climate Change Lawsuit Moves Forward as German Judges Arrive in Peru," State of the Planet, Columbia Climate School, 4 August 2022.

9"Indonesia islanders file climate lawsuit against Swiss cement group Holcim," Financial Times, 1 February 2023. Gated.