Chubb joins trend to pull away from coal
Chubb has joined a trend among insurers and reinsurers to pull away from the coal industry, a move hailed as a “game-changer”.
It is the first major US-market insurance company to adopt a restrictive policy towards coal-related underwriting and investment.
Bermudian-based Axis Capital has told The Royal Gazette it also expects to reduce its exposure to coal.
A United Nation’s report has found that one pathway to limiting global warming to 1.5C by reducing carbon emissions requires phasing out coal power worldwide by 2050.
Chubb’s move follows similar action by insurers and reinsurers in Europe and Australia, including Axa, the parent of Bermuda’s Axa XL.
Chubb is headquartered in Zurich and has offices in Bermuda on Woodbourne Avenue.
It will no longer underwrite the construction and operation of new coal-fired plants or new risks for companies generating more than 30 per cent of revenues from coal mining or energy production from coal.
Existing insurance coverage for coal-plant risks that exceed the 30 per cent threshold will be phased out by 2022. In addition, it will not make debt or equity investments in companies that generate more that 30 per cent of revenues from thermal coal mining or energy production from coal.
Evan Greenberg, Chubb’s chief executive officer, said: “Chubb recognises the reality of climate change and the substantial impact of human activity on our planet.
“Making the transition to a low-carbon economy involves planning and action by policymakers, investors, businesses and citizens alike. The policy we are implementing today reflects Chubb’s commitment to do our part as a steward of the Earth.”
Mary Anne Hitt, director of Sierra Club’s Beyond Coal campaign, said: “Chubb is the largest commercial insurance company in the US, and this move sends a signal that insuring coal isn’t just the wrong thing to do for our climate but also bad for business.
“We applaud Chubb for making this commitment, and we’ll pressure other US insurance companies to follow their example.”
Ross Hammond, senior strategist for Insure our Future, the US-branch of the Unfriend Coal campaign, said: “A major US insurer like Chubb restricting insurance for coal projects and companies is a game-changer.
“Now the company needs to strengthen its policy to exclude new coal mines, fully phase out coal across all underwriting and investment activities in line with the Paris Agreement, and stop insuring the destructive tar sands sector.”
Lindsey Allen, executive director of Rainforest Action Network, said: “We are encouraged to see Chubb taking real action to address climate change and insure a healthier future.”
The Beyond Coal campaign goals include closing all coal plants in the US and replacing the majority with clean energy solutions, such as wind and solar power.
Chubb’s move is likely to improve its standing in the insurance industry scorecard compiled annually by the Unfriend Coal campaign. The survey assesses 24 major insurers and scores their policies on coal insurance and divestment, and other aspects of climate leadership.
On the 2018 list, Chubb and Axis Capital achieved no points for their coal insurance and coal investment stance. Others who scored no points included American International Group, Liberty Mutual, Sompo and Tokio Marine.
In contrast, Swiss Re topped the list for its policies, with Axa also among the “leaders”. Lloyd’s of London achieved a mid-table position.
The Royal Gazette asked Axis Capital for an update on its position regarding underwriting and investment related to the coal industry. In a statement, it said it is growing its corporate social responsibility programme, with creating a positive environmental impact as one of our core pillars.
The company said: “Axis will introduce an environmental policy with the expectation that we will reduce our exposure to coal. We are presently conducting extensive research that includes engaging with our internal and external stakeholders to shape a policy that aligns with our collective aspirations and values.”
Axis said it is committed to supporting the increased adoption of renewable energy as an alternative to fossil fuels, adding: “This includes continuing to invest in our renewable energy business, where Axis is already a top-five global player.”
John Huff, chief executive officer of the Association of Bermuda Insurers and Reinsurers, said the island’s insurance and reinsurance market “has long been a leader to addressing climate risks from changing weather patterns generally to adapting to increased storm severity and frequency in the 150 countries where Abir members do business”.
He said: “As a global hub known for expertise in underwriting natural catastrophe risk, Bermuda’s extraordinary reliance on ever-improving science related to the climate is unparalleled.
“Generally, insurers and reinsurers are making individual choices on their underwriting appetite and preferences on insuring certain industries including energy.”
In its Mining Risk Review 2018, Willis Towers Watson highlighted the impact of the retreat from coal underwriting by some major insurers and reinsurers. It said finding insurance for coal is “likely to become increasingly challenging — especially if North American insurers begin to follow the European lead”.
That trend is evident in Unfriend Coal’s report which shows the market share of non-life insurers that have limited support for coal increased from 3.1 per cent to 7.3 per cent from 2016 to 2017, while for reinsurers the change was 3.8 per cent in 2016 to 33.4 per cent last year.
Unfriend Coal said: “Insurance companies are in a unique position to accelerate and scale up the required transition to a low-carbon economy. As risk manager, they play a silent but essential role in deciding which types of project can be built and operated in a modern society ... if a project is not insurable, it’s not bankable.”
Last week, Moody’s Investors Service warned of environmental, social and governance exposure risks to insurers and reinsurers, such as environment-related regulatory and social pressures from increased public concern for “climate change issues”.
It said insurers with large investment portfolios are at risk of losses from “stranded assets” as tightening carbon regulations and a decline in demand for some fossil fuels increases the risk that fossil fuel-related assets become economically unviable. It points to the International Renewable Energy Agency, which estimates there could be $10 trillion of stranded assets by 2050 resulting from efforts to reduce CO2 emissions to prevent global temperatures from rising more than 2C above pre-industrial levels — an objective of the 2015 Paris Agreement.
Sherri J leaves Magic 102.7
Dismont demands names of panellists
Edith Richardson 1922-2019
MenCo thrives after style switch-up
Causeway chaos after traffic accident
Tweaks to Restaurant Weeks formula announced
Boost for charity from cross-Britain ride
Sheridan’s fairytale festive job
Standing room only at healthcare forum
City offers graffitist chance to go ‘legit’
Island embraces subsea cable hub opportunity
DCFS assistant director denies charges
Scars calls for background checks
Online boutique stages holiday season pop-up
BMA forms view on cannabis related risk
Take Our Poll
- What sport do you most prefer to read about in the RG?
- Boxing/Martial Arts
- Rugby Union
- Total Votes: 3826
- Poll Archive