The number of insurers withdrawing cover for coal has more than doubled in 2019 as the industry's retreat from the sector accelerates and spreads beyond Europe, the Unfriend Coal campaign ("UCC") reported in its third annual scorecard on insurance, coal, and climate change.
Coal exit policies have been announced by 17 of the world's biggest insurers controlling 46 percent of the reinsurance market and 9.5 percent of the primary insurance market, the UCC said in a statement. Most refuse to insure new mines and power plants, while industry leaders have ended cover for existing coal projects and the companies that operate them, and have adopted similar policies for tar sands.
Action has escalated since international NGOs launched the UCC in 2017. The first three companies announced that they were withdrawing insurance for coal that year, followed by four in 2018, and a further 10 in 2019 – including the first U.S. and Australian insurers.
Insurers also have divested coal from roughly $8.9 trillion of investments – over one-third (37 percent) of the industry's global assets. To date, at least 35 companies have taken action, up from 15 companies with $4 trillion assets under management in 2017 and 19 with $6 trillion in 2018, according to the UCC.
Peter Bosshard, the UCC's coordinator, said, "The role of insurers is to manage society's risks – it is their duty and in their own interest to help avoid climate breakdown. The industry's retreat from coal is gathering pace as public pressure on the fossil fuel industry and its supporters grows. However, major U.S. and Asian insurers continue to undermine international climate action by insuring and investing in coal projects. All responsible companies must make coal uninsurable by ending support for both new and existing mines and power plants, including the Adani Group's destructive Carmichael coal mine in Australia."
Jennifer Morgan, executive director of Greenpeace International, said, "Insurance companies are as culpable for the climate emergency as the fossil fuel industry. While they insure lives, health, and property, they service a sector that is seemingly destroying all three. If they wanted to, insurers could strip fossil fuel firms of their social license and their access to finance for the benefit of people and planet."
According to the UCC, insurer action on coal is causing tangible impact, with insurance brokers reporting that the cost of insuring coal is increasing as the market shrinks. In September 2019, U.K. broker Willis Towers Watson described an "increasing and worrying trend for insurers to withdraw from what they consider to be environmentally unfriendly industries such as coal," warning that this trend "leaves very few primary markets for coal miners to turn to."
The new UCC report found that:
- Almost all major European insurers have adopted coal exit policies. However, most specialty insurers on the Lloyd's market have yet to take action.
- U.S. insurers are beginning to shift, with coal exit policies announced by Chubb and AXIS Capital. AIG and Liberty Mutual are now among the biggest international carriers to still insure coal and among the rare players able to take the lead in multi-billion-dollar coal projects.
- In Asia Pacific, Japanese, Chinese, and Korean insurers such as Tokio Marine, SOMPO, Sinosure, and Samsung Fire & Marine continue to play a critical role in insuring coal. However, Australia's QBE and Suncorp announced exit policies this year.
- Most companies that have stopped insuring new coal projects still continue to cover existing coal operations.
The UCC ranked 30 leading insurers on their action on coal and climate change, assessing and scoring their policies on underwriting, divestment, and other aspects of climate leadership. It was based on responses to a survey from 24 of these companies and on publicly available information.
- Underwriting: Swiss Re and Zurich were the leaders in ending coal insurance. They have withdrawn cover from both new and existing projects, as well as the companies operating in these sectors, and have applied similar policies to tar sands.
- Divestment: Swiss Re, SCOR, and Zurich were the leaders on divestment. Their policies excluded both coal and tar sands projects and, in the case of SCOR and Zurich, any company that planned new coal projects.
- Climate leadership: Legal & General was the leader on other aspects of climate leadership for its support of numerous shareholder resolutions calling for climate action and also for advocating for industry bodies to address climate change. Aviva, Zurich, Allianz, and AXA also scored well.
Learn more: https://unfriendcoal.com/2019scorecard.
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].