Reinsurers set to feel more heat on coal
Insurers and reinsurers in Bermuda can expect to feel more heat as efforts increase to make them pull away from the coal industry and fossil fuel sector.
An updated scorecard that measures which insurance companies are taking action on coal and climate, and which are the laggards, will be published on December 2.
Taken as a block, Bermuda’s insurance sector is trailing behind many counterparts in Europe and Australasia who have stepped back from underwriting or investing in thermal coal projects.
Axis Capital Holdings Ltd broke from the Bermudian-based pack last month when it announced it was shifting away from coal and dirty energy. Its new thermal coal and oil sands underwriting and investment policy becomes effective on January 1. The company previously languished at the bottom of the Unfriend Coal scorecard.
The move was described as encouraging by Peter Bosshard, coordinator of Unfriend Coal.
He said the insurance industry is well placed to take action that can have a major impact on reducing the production and use of coal and fossil fuels, and show climate leadership.
A United Nations report has found that phasing out coal power worldwide by 2050 could limit global warming to 1.5C through reduced carbon emissions.
“Scientists tell us that we are running out of time if we still want to manage climate breakdown. All actors in society need to take unprecedented action,” he said.
“That includes the insurance and reinsurance industry. They are particularly well placed to take action because they have access to the best leading climate science, so they know exactly what the risks of climate change are.”
Some insurers have warned about climate risk since the 1970s, and they should do all they can to promote and accelerate the transition away from fossil fuels, he said.
“They are well positioned to do so because with their cover, their insurance, no major construction or infrastructure project will go ahead, and that’s also true for the coal industry. No coalmine or thermal power plant will get funding or government permits if it doesn’t have insurance.”
Unfriend Coal is calling for the insurance industry to immediately walk away from fossil fuels and coal, both from an underwriting and investing perspective.
Mr Bosshard said some insurance companies had “came to the party a bit late”, but the situation is improving.
“Since April 2017, we have seen 17 major international insurance companies ending or limiting their support and insurance services for at least new coal projects, and in some cases also existing coal operations,” he said.
“That includes the world’s biggest insurance and reinsurance companies, and with Axis Capital includes the first Bermudian-based insurance company.
“That is encouraging. There are still laggards, particularly in East Asia, the US, and the specialty insurers, many of which are headquartered in Bermuda.”
This is borne out by Willis Tower Watson’s Mining Risk Review 2019, which showed an increasing pace of insurers refusing to underwrite coal mining risks, but noted that “while there are instances of markets pulling back from or exiting thermal coal, the core Bermuda carriers remain steadfast, and have largely maintained a consistent appetite”.
Mr Bosshard said: “It’s disappointing, it is also ironic. Bermuda is so exposed to the risk of ever-stronger hurricanes, to sea-level rise, to coral bleaching, and at the same time is helping global coal insurers.”
He said some companies based on the island are major players in insuring fossil fuels, and mentioned Hamilton, Argo, Lancashire, and Everest Re.
When contacted by The Royal Gazette, Argo said it had no comment. However, it is understood the company has almost no coal-related investments in its portfolio, and that its connection with the coal industry is confined mostly to workers’ compensation insurance.
Hamilton Group, Lancashire Holdings, and Everest Re have been approached for comment.
In the broader insurance industry there has been a shift away from involvement with the coal industry.
“What started out as a few leading actors taking action in 2017 has now become the benchmark for this industry,” said Mr Bosshard
“No responsible insurance actor should insure new coal projects. There is no space for that in the planet’s carbon budget.”
In the coming year, the Unfriend Coal campaign will focus on the companies it views as laggards, including US and specialty insurers. It will create public awareness about the role of those companies and put pressure on them to join the trend of pulling away from thermal coal.
Explaining what the pressure will look like, Mr Bosshard said: “The first thing is purely education, creating awareness around the role that insurance companies play in this sector.
“The frustration of insurance employees about the role their employers play in this has been a motivating factor in getting the first insurers to move on this.
“Many insurance sector employees take pride in being on the good side of the climate crisis and being part of the solution.”
He said the campaign will educate insurance staff about whether the company they work for is still underwriting coal. It will do so through the media, trade journals and by directly targeting employees of the respective companies.
In addition, he said: “Insurance companies are very keen to hire new talent. Many of them have an ageing workforce and need to hire young risk management talent, so we have started working with the association for risk management students in the US.
“When they start to look for work, how their potential employers position themselves in regard to climate change and particularly coal will be an important factor for them.”
The campaign is also encouraging insurance customers to tell their insurers or brokers that they would like to get fossil fuel-free insurance.
“We are also exploring regulatory action, to make regulators understand the financial risks of a climate breakdown, including for insurance companies, and to take action to encourage insurance companies to move away from coal.”
Meanwhile, peer pressure will be applied, such as Unfriend Coal’s annual scorecard that publicly compares how far companies have come in taking climate action and disassociating themselves from coal.
In related news, the European Investment Bank has adopted a strategy to end funding of all fossil fuel energy projects. The bank, which is owned by the European Union member states, will not consider new financing of unabated fossil fuels, including natural gas, from the end of 2021.
Maybury wins $1.9m from BHB
Pssst, there’s a new takeout in town
Ex-girlfriend: Rogers ‘confessed’ to killing
Temporary ministers paid $240 extra a day
Woman and child injured in crash
Conditional discharge after family dispute
Big Brother and Sister of the Year honoured
Addict admits string of thefts from homes
Take Our Poll