Are Employees Pushing Insurers to Shun Coal in Climate Change Movement?

Seventeen insurers have restricted insurance services to coal projects in the past two years.

A dozen insurers have adopted policies to stop all direct insurance coverage to new coal projects – among them are Allianz, AXA, Generali, QBE, Zurich, SCOR and Swiss Re. And seven have restricted their insurance services to existing coal projects.

These are clearly executive level decisions being made, but one activist involved with pressuring the industry to get away from fossil fuels believes that insurance employees may be also playing a role in the wave of recent climate change-battling decision making we’re seeing from the industry globally.

“We are starting to have people from insurance companies contacting us and asking us how they can push their companies,” said Ross Hammond, senior strategist for the Sunrise Project. “I think you’ll be seeing more of that for sure in the next year.”

Hammond said increasingly more employees are calling, emailing and reaching out on social media to his group and other groups affiliated with efforts to get insurers to stop investing in fossil fuels and to halt underwriting carbon-emitting projects.

The Sunrise Project is part of a coalition of about two dozen environmental activist groups that launched the global Unfriend Coal campaign in 2017. The groups followed that with the Insure our Future campaign in late 2018, which has the goal of getting U.S. carriers to stop insuring in and investing in coal and tar sands projects.

The campaigns are largely funded by climate philanthropists. Members of the campaigns have staged numerous demonstrations and used public pressure tactics to get insurers to notice their cause. That includes protesting outside the annual meeting of the National Association of Insurance Commissioners dressed as some of the industry’s best known advertising icons.

The idea is that halting industry investments into fossil fuels and getting them to stop underwriting large, carbon-producing projects, is a direct way to begin to tackle climate change.

“For us, insurers have to be part of that solution,” Hammond said. “We’re essentially focused on getting them to stop making the problem worse.”

In his view, insurers play a unique role as “arbiters of risk,” sending signals to the broader market about what sectors of the economy are good long-term investments.

Lately the groups have been calling out large U.S. insurers like AIG, Liberty mutual, and Berkshire Hathaway for lagging behind their European insurance industry counterparts.

“They’re operating in a different political context than their peers are,” Hammond said, adding that we should expect to see more pressure being applied to U.S. insurers in coming months and years.

Below is a summary of the policies adopted by some of the largest insurers and reinsurers compiled by the Sunrise Project:

AXA XL

AXA XL no longer offers construction coverage for new coal plant sand new coal mines. AXA XL no longer provides property coverage for existing coal plants when these are included in coal-only risk packages and when these are included in packages with more 50% coal-related premiums. AXA XL will make some exceptions in the least developed countries.

SCOR

SCOR ceased to provide insurance or facultative reinsurance specifically promoting the construction of new thermal coal mines or new coal plants, and the operation of existing coal mines and plants.

Zurich

Zurich no longer provides insurance or risk management services for new thermal coal mines or plants. For companies that generate more than 30% of their revenue or electricity from coal, or that produce more than 20 million tons of thermal coal per year, or are in the process of developing any new coal mining or coal power infrastructure, Zurich won’t provide coverage to new clients and won’t renew coverage to existing clients without a transition plan after a two-years engagement process starting in June 2016.

Allianz

Allianz no longer offers single-site/stand-alone insurance coverages related to the construction and operation of lignite/coal-fired power plants and mines where lignite/coal is extracted, with few exceptions. Allianz is committed to fully phase out coal-based business models across its P/C portfolios by 2040.

Swiss Re

Swiss Re will not provide any new direct reinsurance services for new construction projects for new thermal coal mines and power plants. Swiss Re will not provide reinsurance to businesses with more than 30% thermal coal exposure and intends to apply the policy to treaties by 2023.

Munich Re

Munich Re will no longer insure any new constructions of coal-fired power plants or coal mines as single risks in developed countries or in the majority of emerging markets. There may be a few exceptions in countries where a significant proportion of the population does not yet have access to electricity.

Generali

Generali committed to stop insuring new coal projects. Companies generating more than 30% of their revenues or power generation from coal and mining companies producing more than 20 million tons of coal a year, or listed in the 120 Coal Plant Developers List, are excluded from its investment portfolio, and new clients meeting these criteria won’t be offered property coverage. However, Generali made exceptions for four big Polish and Czech coal utilities on its investment side. For these companies, Generali committed to exclude them from its investment and insurance services if they failed to have a transition plan by March 2019.

Vienna Insurance Group

VIG does not insure new coal plants and mines. In countries with a coal exit strategy, VIG will phase out its coverage for existing coal mines and plants and will no longer provide insurance services to mining companies generating more than 30% of their revenues from coal or producing more than 20 million tons of coal per year as well as power companies generating more than 30% of their power from coal or with more than 10 GW of coal power capacity. In other countries, VIG will tend to reduce its coverage to coal and will require companies to adopt by 2021 a credible plan for exiting coal-fired generation with a just transition plan.

MAPFRE

MAPFRE will cease to insure the construction of new coal-fired electricity plants or coal mines.

UNIQA

UNIQA excludes new clients generating more than 30% of their revenues or power generation from coal and from mining companies producing more than 20 million tons of coal a year, and will consider excluding existing clients meeting these criteria after 2025 depending on their capacity to present a credible transition plan.

QBE

QBE will not provide any new direct insurance services for new construction projects for thermal coal mines or coal-fired power stations or thermal coal transport infrastructure. By Jan. 1, 2030, QBE will have phased out all direct insurance services for companies generating more than 30% of their revenues or power from thermal coal. This cover all risks except statutory or compulsory insurance such as workers’ compensation and compulsory third-party motor insurance.

Talanx

Talanx stopped insuring new coal plants and mines but still allows a limited number of exceptions in countries where coal accounts for a large share of the energy mix and sufficient access to alternative energy sources is not available. This includes Poland, where its subsidiary Ergo Hestia is active. Talanx also committed to no longer include any coal-fired power plants or coal mines in its insurance portfolio starting in 2038.

Hannover Re

Hannover Re stopped insurance of new coal plants and mines but still allows a limited number of exceptions in countries where coal accounts for a large share of the energy mix and sufficient access to alternative energy sources is not available, and after review of the technical standards. Hannover Re committed to exit coal by 2038.

Nationale Nederlanden

NN Group will stop providing insurance services to companies that derive more than 30% of their revenues from thermal coal mining or that use at least 30% thermal coal for power generation. Any existing contracts will not be renewed. NN will develop formal guidelines to ensure that by 2030, it only provides new insurance covers to clients that have 5% or lower exposure to coal-related activities

Chubb

Chubb will not underwrite risks related to the construction of new coal-fired plants. Exceptions to this policy will be considered until 2022 in regions that do not have practical near-term alternative energy sources, and taking into account the insured’s commitments to reduce coal dependence. Chubb doesn’t provide coverage to new clients that generate more than 30% percent of revenues or power generation from thermal coal. Chubb will phase out coverage for existing clients that generate more than 30% of their revenues from coal mining by 2022, and will start phasing out coverage for companies that generate more than 30% of their power in 2022, taking into account the viability of alternative energy sources in the impacted region.

Suncorp

Suncorp will not directly underwrite new thermal coal mining extraction projects, or new thermal coal electricity generation. Suncorp will phase out, by 2025, coverage for companies generating more than 10% of revenues from thermal coal mining or electricity generation except those whose business is consistent with the transition to a net-zero emissions economy by 2050.

Axis Capital

Starting in 2020, AXIS will not provide new insurance or facultative reinsurance for the construction of new thermal coal plants or mines and their dedicated infrastructure, or to companies that generate 30% or more of their revenues from thermal coal mining, generate 30% or more of their power from thermal coal. Renewals will be considered on a case-by-case basis until 2023. Exceptions to this policy may be considered on a limited basis until 2025 in countries where sufficient access to alternative energy sources is not available.

The Sunrise Projects and their partners plan to use the above list and create an industry scorecard, which they expect to release in December.

Hammond is encouraged by the progress, but in speaking to him, it’s clear there will be more pressure, not less, put on the industry in the near future.

“I think the industry has come a long way, and it still has a long way to go,” he said.

 

 

 

7 November 2019

INSURANCE JOURNAL