Insurers’ continued retreat from coal is making it harder and more expensive to secure insurance for coal projects, the Insure Our Future campaign (formerly Unfriend Coal) revealed today in its fourth annual scorecard on insurers’ climate policies. Although momentum is growing, it falls short of what is needed to drive action to meet international climate targets. Major companies in the U.S., the Lloyd’s market and East Asia are still insuring coal, and the global insurance industry has so far failed to take comprehensive action on oil and gas.
Insuring Our Future: 2020 Scorecard on Insurance, Fossil Fuels and Climate Change published by 19 organisations from 11 countries, ranks 30 leading insurers assessing their policies on underwriting and investing in fossil fuels and other aspects of climate leadership.
Most European and Australian insurers no longer provide cover for new coal projects, while others are becoming more cautious and restricting capacity. Coal companies are facing rate increases of up to 40%, according to broker Willis Towers Watson . Controversial projects – like the Adani Group’s planned Carmichael coal mine in Australia – are finding it hard to obtain insurance cover at all.
The insurance industry has a unique power to drive the transition to a low-carbon economy by only insuring projects that are consistent with limiting global warming to 1.5°C.
- Since the Insure Our Future campaign launched in 2017, at least 23 companies have ended or limited their cover for coal projects, representing 12.9% of the primary insurance market and 48.3% of the reinsurance market.
- Insurers are also divesting from coal: at least 65 insurers with combined investments worth $12 trillion — likely to be more than 40% of the industry’s total assets — have either adopted a divestment policy or committed to making no new coal investments. This is up from $4 trillion in 2017.
Peter Bosshard, Coordinator of the Insure Our Future campaign, says: “Insurers’ continuing shift away from fossil fuels is positive, but in the face of a worsening climate crisis it needs to accelerate. Laggards like Lloyd’s, AIG and Tokio Marine must stop insuring coal now, and all insurers need to phase out support for the oil and gas industry.”
For the first time, this year’s scorecard evaluates insurers’ commitments on oil and gas as well as coal. Just nine insurers have limited or ended cover for tar sands oil – up from four last year – and Australia’s Suncorp is the first and only company to announce a phase-out of all oil and gas coverage.
Burning coal is responsible for 40% of CO2 emissions not related to land use, but oil and gas combined are responsible for 55%, and building any new fossil fuel projects is not consistent with a 1.5°C pathway. The shrinking coal market demonstrates the impact insurers can have on fossil fuel development, and the highly concentrated oil and gas insurance sector is vulnerable.
Ten insurers cover about 70% of the global oil and gas market. However, companies controlling 45% of the market have already moved away from coal, and a quarter of the market is provided by insurers that back a 1.5°C climate target.
Lucie Pinson, Executive Director of Reclaim Finance, and 2020 Goldman Environmental Prize Recipient, says: “European insurers have led the industry’s retreat from coal and they must now step up and lead action on oil and gas. As Allianz’s CEO said in 2018, the insurance industry must lead the charge against climate change. It will fail to protect us if they don’t stop providing cover for the expansion of the oil and gas sector.
Allianz, AXA, Munich Re and Zurich have pledged to align their investment portfolios with 1.5°C, and if they are serious about this target they must also stop investing in companies which plan new oil and gas production. Today, their climate pledge takes the water from all sides. There is no lack of examples of their hypocrisy. They all voted against the climate resolution at the last Total’s General Assembly, considering that the oil and gas major was doing just fine on climate and voluntarily closing their eyes on Total’s expansion plans in the most dangerous and dirty sectors such as in the Arctic or the shale oil and gas industry”.
Contact : Lucie Pinson, Founder and Executive Director of Reclaim Finance, 2020 Goldman Environmental Prize Recipient, lucie@reclaimfinance.org, +33 (0)6 79543715