A growing number of insurers are providing less cover for energy providers that remain committed to the use of coal to help reduce climate change and force the energy industry to embrace renewables. Although insurers stand to lose business in the short term, the long-term benefits to the industry could be considerable, data and analytics company GlobalData said in a statement.
Daniel Pearce, insurance analyst at GlobalData, commented, “With climate change potentially causing the increased frequency of extreme weather events and rising sea levels, ceasing protection for fossil fuel-based energy providers may enable the industry to benefit from reduced exposure to potential environmental liability risks and enhance its public reputation.”
GlobalData observed that AXA is extending its climate change policy to its recently acquired XL division. The move will result in XL no longer insuring any construction projects related to coal-fired power plants and the extraction of tar sands, bringing the XL division into line with the rest of the AXA business. It is expected to drive a €100m ($112.16m) loss in revenue, mainly in 2020. GlobalData said, however, that it “will undoubtedly improve public perception of an insurance industry that has historically borne a fractious relationship with consumers for its typically money-first approach.”
Other insurers also are taking action. GlobalData noted that Chubb recently announced that it no longer would provide insurance or investments to companies that operate coal-fired plants, or to firms for which coal mining generates more than 30 percent of revenue.
Mr. Pearce added, “On the surface, distancing itself from coal may have a significantly negative impact on the insurance industry, given the loss of business. However, in addition to the possible progress in consumer perception, the industry may in fact enjoy a considerable financial benefit in the longer term as a result of any anti-coal stance.”
Learn more: GlobalData.com.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].