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Insuring Coal No More

The Unfriend Coal campaign calls on insurance companies to stop underwriting and investing in climate-destroying coal projects. This monthly newsletter shares campaign highlights on climate, coal, and the insurance industry.

Mapfre and Uniqa join the coal exit train

The coal exit train continues to pick up speed. With Mapfre and Uniqa, two more major European insurers announced policies to stop or limit insuring coal in recent days, bringing the total number of insurers ditching coal to 10.

The CEO of Mapfre, the largest non-life insurer in Spain and Latin America, announced on March 8 that his company would stop underwriting new coal mines and power plants, and would no longer invest in companies that derive more than 30% of their revenue from coal. Unlike other insurers, Mapfre did not address in its announcement whether it would also phase out insurance support for existing coal operations, and whether it would divest its existing holdings in the coal sector.

On March 14 Uniqa, the largest insurer in Austria, announced it will stop insuring new coal plants and mines, becoming the tenth insurer to announce restrictions on its cover for coal. The new policy is available here. This policy is bad news for the Polish coal sector. Following in the footsteps of Allianz, Generali and Munich Re, Uniqa’s coal exit leaves Talanx as the only major, non-Polish insurer active in Poland that hasn’t committed to stop insuring new coal plants and mines.

Other than Mapfre and Uniqa, AXA, SCOR, Zurich, Allianz, Swiss Re, Munich Re, Generali, and VIG have also stopped or limited insuring coal.

Lloyd's warned of legal risks over Carmichael coal mine project

The Adani Group’s proposed Carmichael coal mine in Australia has become a hot potato for insurance companies. On March 5, ClientEarth put Lloyd’s on notice of the legal and financial risks, including the stranded asset and reputational risks, associated with the project. “Should you or your syndicates fail to take these factors into account as part of your risk management processes,” the environmental law group warned the insurance market, “this may constitute a breach of your legal duties."

So far 46 financial institutions, including 10 insurers, have pledged not to get involved in the Carmichael mine or have adopted policies which rule out such support. In contrast Lloyd’s and its insurance syndicates have declined to rule out support for the project.

“Many insurers acknowledge that climate change poses an existential threat to the sector”, commented Stephanie Morton, one of the authors of the ClientEarth letter. “Coal is the single largest contributor to climate change. The irony is that by enabling new coal projects, insurers are undermining their own viability. It is a stark case of climate hypocrisy.”

Rating agency and UN body encourage ESG action for insurers

In a fitting complement to ClientEarth’s letter, the insurance rating agency AM Best recently warned that insurers which ignore stakeholder pressures on environmental, social and governance (ESG) factors must “consider the potentially adverse effects of elevated reputational risk.” “Heightened reputational risk remains a key consideration for (re)insurers, which may fuel a backlash from their consumers should their ESG values seem wanting”, the rating agency notes in a new report.

AM Best says that there is “no definitive consensus” that an ESG strategy has financial benefits, but projects that insurers with good governance practices will likely “experience less volatility in their results”. It also warns that “holdings in certain ‘toxic’ industries such as coal or tobacco have a higher risk of becoming ‘stranded assets’”.

The UN Principles for Sustainable Insurance Initiative also recently encouraged insurers to integrate ESG criteria into their underwriting and avoid reputational damage with customers, employees and investors as well. A new UN PSI guide offers insurers advice on how they can incorporate, detect, analyze, and decide on ESG risks.

The new guide contains heat maps which identify ESG risks across economic sectors and business lines. It finds that mining, oil and gas, and coal construction offer particularly serious ESG risks to insurers. It does not address the issue that certain sectors (including coal) are inherently so toxic that responsible insurers will exclude them from underwriting altogether.

The new guide, which was developed by UN PSI in cooperation with researchers and insurers, is open for public consultation through June 30, 2019. North American and Asian insurers abstained from participating in the preparation of the guide.

Shareholders pressure QBE to end fossil fuel support

On March 5 shareholders coordinated by Market Forces together with the investment manager Australian Ethical submitted a resolution calling on QBE to set targets that reduce its investment in and underwriting of coal, oil and gas companies, in line with keeping global warming below 1.5C. The resolution notes that QBE has suffered heavy losses due to natural disasters in recent years, and that the Australian insurer is falling behind international best practice with respect to coal.

A shareholder resolution calling on QBE to disclose the risks to its business from climate change was backed by 19% of shareholders in 2018. The new resolution will be up for a vote at the insurer’s annual general meeting on May 9.

Lemonade calls on insurers to ditch coal and tar sands

Insurance start-up Lemonade has teamed up with the Insure Our Future campaign to produce a new video in which CEO Daniel Schreiber explains why his company pledged not to invest any of their customers' premiums in fossil fuels.

Lemonade’s pledge marked the first time a U.S. insurance company took action on fossil fuels. And while Lemonade doesn't insure fossil fuel projects, Schneider has a simple but powerful message for its U.S. peers: "For those in our industry who underwrite polluting projects – like coal power plants or tar sands mining – we have a simple ask: please don’t."

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Got a news story or campaign action you want us to share? Email Peter Bosshard and we’ll look at including it in our next newsletter. 

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