(Reuters) — U.S.-based insurers have invested hundreds of billions of dollars in fossil fuel-related assets that in turn contribute to the risk of climate-related damage to the underwriting side of their businesses, a new report said Tuesday.

A data sample comprising 77% of U.S. insurers showed they held fossil fuel-related assets worth $536 billion in 2019, and patterns are unlikely to have changed dramatically since then, according to sustainability consultancy ERM, investor advocacy group Ceres and carbon accounting company Persefoni.

As governments and shareholders put increasing pressure on financial companies to measure and curb the flows of capital to businesses that warm the climate, the report says insurers are “uniquely exposed.”

Climate catastrophes like wildfires are prompting some businesses to stop covering homes in high-risk areas such as California, and decisions made on the investment side to put money in activities facing tougher regulation could squeeze their finances, Ceres Managing Director Steven Rothstein said.

“If they have stranded costs on investments they won't be able to pay out on underwriting,” Mr. Rothstein said. “While the day to day is different, strategically they are very connected.”

The researchers interviewed executives, state regulators and other experts to assess what might have changed since 2019, the most recent year for which the data, collected by California regulators, was available.

Some companies said they had made “huge changes,” and the researchers said there was evidence the sector had made a “significant effort” to respond to global expectations about how they loan to and invest in emitting companies but that it would take several years for this to show.

Insurers have to invest for the long term, meaning that assets like bonds might sit on their books for years after a policy shift.

“We started excluding coal in 2015, but some of our coal bonds run for 20 years,” one executive from a Europe-headquartered insurance group said. All participants were granted anonymity.

The report counted corporate utility assets as “fossil fuel-related,” but the researchers acknowledged that many in the sector are investing heavily in clean energy.