Insurance industry avoids coal, oil and gas projects
Insurance companies that have long said they would cover anything, at the right price, are increasingly excluding fossil fuel projects because of climate change – to cheers from environmental activists.
More than a dozen groups that track insurers’ policies on high-emission activities say the industry is turning its back on oil, gas and coal.
The alliance, Insure Our Future, said on Wednesday that 62% of reinsurance companies – which help other insurers spread their risk – plan to stop covering coal projects, while 38% now exclude certain oil projects. and natural gas.
In part, investors are calling for it. But insurers have also begun to make the connection between fossil fuel infrastructure, such as mines and pipelines, and the impact of greenhouse gas emissions on other parts of their business.
This includes extreme weather events such as hurricanes, which are expected to become more powerful with global warming. Hurricane Ian recently caused tens of billions of dollars in damage to the United States.
Earlier this month, Munich Re, one of the world’s largest reinsurers, said it stop supporting new oil and gas fields from next April.
“Insurance is the Achilles’ heel of the fossil fuel industry and has the power to accelerate the transition to clean energy,” said Peter Bosshard, the report’s author.
Indeed, projects that require large amounts of capital are unlikely to attract investment if they cannot obtain insurance to cover potentially costly accidents.
Insure Our Future said its annual scorecard of 30 companies ranked Allianz, AXA and Axis Capital among the best for their coal exit policies, while Aviva, Hannover Re and Munich Re came out on top for oil and natural gas.
In contrast, some insurers such as Berkshire Hathaway, Starr and Everest Re have adopted few or no restrictions on coal, oil or gas projects, he said. The alliance also criticized Lloyd’s of London for announcing plans two years ago to end coal cover but then declaring it optional.
Many of the insurers reviewed have introduced their restrictions in the past year, although the exact policies differ significantly, according to the report.
Some countries have meanwhile proposed applying the idea of insurance to help countries facing massive costs from climate change.
Germany, which chairs the Group of Seven major economies, and the V20 alliance of vulnerable nations, chaired by Ghana, agreed last week to promote the idea of a “global shield” against climate risks.
The proposal, which will be discussed at next month’s UN climate summit in Egypt, responds in part to demands from poor countries for increased financial assistance to deal with loss and damage from rising global temperatures.
Sign up for the Makeshift Features mailing list so you don’t miss our biggest features, exclusive interviews and surveys.