How Chubb's coal exit policy stacks up
Chubb, one of the largest global property and casualty insurers in the power and energy sectors, deserves credit for being the first US insurer to adopt a coal exit policy – a historic breakthrough for the Insure Our Future and Unfriend Coal campaigns. The policy was welcomed by Rainforest Action Network, the Sierra Club and many other climate campaigners.
Al Gore, Mike Bloomberg and others have pointed out that other US insurers now have to follow suit in making coal uninsurable. The focus of attention has already shifted to Chubb’s peers Liberty Mutual and AIG.
Compared with existing policies, Chubb has made a strong commitment in that it will not underwrite new risks for companies that generate more than 30% percent of revenues from thermal coal mining and will phase out coverage of existing risks that exceed this threshold by 2022.
Chubb’s new policy also contains several exceptions which appear large enough to maintain coverage for too many coal (and tar sands) projects in the coming years. Campaigners have asked Chubb to address the following concerns:
. The policy allows insuring the construction of new and existing coal plants until 2022 “in regions that do not have practical near-term alternative energy sources” and “taking into account the insured’s commitments to reduce coal dependence”. Depending on how Chubb interprets this loophole, it will allow the insurance of hundreds of new plants in Southeast Asia.
. While the policy contains relatively strong language on coal mining companies, it does not seem to rule out insurance support for new stand-alone coal mines such as Australia’s Carmichael project - a concern Chubb urgently needs to clarify.
. Chubb will not underwrite new risks for companies that generate more than 30% of their energy production from coal and will phase out existing risks beyond this threshold after 2022. In doing so Chubb will however take into account “the viability of alternative energy sources in the impacted region”. This often depends more on distorted policies than economics, and Chubb should not hide its responsibility behind governance problems.
. Finally, unlike several of its European peers, Chubb is not ending insurance support for new tar sands projects and their developers.