Insurers withdrawing cover from coal projects have more than doubled this year to 17.
Between them they control almost half the world’s reinsurance market, and 9.5 per cent of the primary insurance market.
Among those enacting coal exit policies is Bermudian-based Axis Capital Holdings Ltd which has leapt from the bottom to the top five of an international scorecard on insurance, coal and climate change.
From a Bermudian perspective it is a piece of good news in the Unfriend Coal campaign’s 2019 scorecard on insurance, which was released today.
While things are changing, more needs to be done globally and within Bermuda’s specialty insurance and reinsurance sector if the world is to avoid a predicted acceleration in global climate change.
That’s the message from Unfriend Coal’s Insuring Coal No More report and scorecard, and from the campaign’s co-ordinator Peter Bosshard.
The scorecard is in its third year. In three categories, points are awarded based on how much an insurer is pulling away from coal insurance, from coal investment, and how much climate leadership it provides.
The listing has expanded each year and now features 30 insurers, with Swiss Re leading the way. Among other leaders, those with operations in Bermuda are Axa, Axis, Chubb, Hannover Re, and QBE.
Legal and General, which has its reinsurance business based in Bermuda, comes top in offering “other climate leadership”. The report said it has committed to align its investment portfolio, including third-party assets, with the goals of the 2015 Paris Agreement, and to support the climate targets through its lobbying activities.
“It publishes its voting record as a shareholder and has supported more resolutions on climate change than any of the world’s top ten asset managers. It is also an active and outspoken member of many investor groups calling for climate change,” the report said.
Other than Axis Capital, Bermuda’s specialty insurers and reinsurers do not feature on the scorecard, but they are on the radar of Unfriend Coal. Mr Bosshard has previously mentioned Argo Group, Everest Re, Hamilton Group and Lancashire Holdings, as being among those with an active role in managing the risks of fossil fuel projects and companies.
Meanwhile, the report said: “This year has seen the first action from specialty insurers on the Lloyd’s market, but most Lloyd’s insurers continue to insure both new and existing coal operations.
“Several are based in Bermuda, which is highly vulnerable to ever more serious hurricanes, yet the island’s specialty insurers ‘remain steadfast, and have largely maintained a consistent appetite’ for coal projects, according to Willis Towers Watson.”
Unfriend Coal is a co-ordinated campaign involving groups around the world, including Greenpeace, Client Earth, and the Sunrise Project. It is applying pressure on the insurance industry to step away from coal insurance and investments, and from other “extreme fossil fuel s,” such as tar sands and Arctic and deep-sea drilling.
When asked by The Royal Gazette for his thoughts on the more than doubling of the number of insurers announcing coal exit policies from seven last year to 17 today, Mr Bosshard said: “Momentum creates momentum, and has almost reached a dynamic of its own. It has sort of become the international benchmark, and once you see the biggest companies in the sector moving then others have less of an excuse not to do the same. That is positive reinforcement.
“This year the climate crisis has hit home. So many more people are realising how serious the climate risks are, so we have seen things like the Extinction Rebellion in the UK and other places, and the school strikes.
“You also have management waking up to the seriousness of this crisis, which has spurred further action.
“Will it continue? The momentum is accelerating, so yes, we expect even more insurers to take action.”
While progress is being made, the Unfriend Coal report said Liberty Mutual and American International Group, the latter headed by Bermudian Brian Duperreault, are among the largest carriers still insuring coal.
Coal is the biggest single contributor to human-made climate change, according to Unfriend Coal. It said climate science institute, Climate Analytics, calculates that holding global temperature rise to 1.5C will require global coal combustion to peak next year and fall by 80 per cent below 2010 levels during the next decade, and end before 2040.
The report said insurance companies can play a role in speeding and scaling-up the transition to a low-carbon economy.
Insurance brokers are reporting less available capacity for coal-fired generators as a result of insurance companies implementing coal exit policies, according to the report, which also said brokers are ducking responsibility for climate action. It highlighted the role Aon March, Willis Towers Watson and Arthur J Gallagher play in supporting continued coal development. It said the Unfriend Coal raised concerns in a letter to the four leading brokers in May, but none of them responded. It also said: “Brokers face considerable reputational risks by continuing to arrange coal projects”.
Unfriend Coal warns that liability insurers face increasing costs and damages of fossil fuel companies targeted by climate lawsuits, with more than 1,300 climate lawsuits brought against governments and companies.
The report and scorecard is scheduled to be launched today at the Insurance and Climate Risk Conference in London, which coincides with the start of the UN Climate Summit in Madrid.
• Click on Related Media to view the Unfriend Coal report and scorecard