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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.

Hannover Re and Talanx Group limit coal insurance

After strenuously defending coal insurance over the years, Hannover Re and its parent company, the Talanx Group, adopted a coal phase-out policy on April 18. Under the new policies Hannover Re and other Talanx companies such as HDI Global and Warta will no longer insure new coal projects, with a major loophole for "countries where coal accounts for a particularly large share of the energy mix and sufficient access to alternative energy sources is not available".

The new restrictions do no apply to company-wide policies and treaty reinsurance. Hannover Re and the Talanx Group plan to eliminate all coal risks from their portfolios by 2038.

With Hannover Re’s new policy, reinsurers accounting for 43.5% of global non-life premiums have now adopted coal restrictions. All companies which Unfriend Coal exposed as insuring coal projects in Poland last year have in the meantime accepted coal restrictions. The specialty insurers of the Lloyd’s market remain Europe’s only major international coal insurers.

In recent months, German NGO Urgewald put strong pressure on Hannover Re to exit the coal business. On April 1, the NGO welcomed the company's incoming CEO with billboards all around the headquarter, flyers, cleaning sets and media work. Urgewald campaigner Regine Richter welcomed the new Hannover Re and Talanx policies on April 18 but noted that given the policies’ loopholes and unresolved questions, “the proof of the pudding will be in the eating”.

QBE the first non-European insurer to limit coal insurance

Australia’s QBE on March 29 became the first insurer outside Europe to adopt coal restrictions, adding pressure on Japanese, Chinese and Korean coal insurers to follow suit.

According to the new energy policy, QBE will stop providing new direct insurance services for thermal coal mines, power plants and transport networks from July 1, and will phase out all direct insurance services for thermal coal, except for statutory or compulsory insurance, by 2030. In its investment business, QBE will withdraw all direct investment in companies that generate more than 30 percent of their revenue from thermal coal from July 1 and introduce a 0.5 per cent limit on investments through managed funds.

Market Forces, which runs an aggressive campaign asking QBE to ditch fossil fuels, welcomed the policy as “an attempt to align itself with the Paris Agreement” but criticized that QBE intends to continue its underwriting and investments in the oil and gas sectors.

Will Generali stick with its coal exit commitments?

In November 2018, Generali stated it was engaging since July 2018 with six coal companies and will decide at the end of Q1 2019 to either end or renew its property coverage to them based on their capacity to present and implement a credible transition plan.

Among the six companies Generali is engaging is PGE, European third biggest CO2 emitter and owner of some of the dirtiest coal plants in Europe. Far from planning a coal phase-out, PGE is expanding its coal mining and burning activities. Along with CEZ, Enea and Energa, PGE is a striking example of a company without a “credible transition plan”.

End of Q1 is long passed and Generali's exclusion of these companies is now overdue. Unless Generali takes the issue back ahead of its coming AGM and acts consistently with its 2018 commitment, the insurer will be considered failing to comply with its own policy and faces the risk of being downgraded in Unfriend coal’s ranking of insurers on coal.

Regulators increase pressure on insurers to act on climate 

Like NGOs, regulators from around the world are raising their expectations for insurers to act on climate change.

On April 15, the Bank of England published a supervisory statement asking insurers (and banks) to respond to increasing climate risks through strengthened governance, risk management, scenario analysis and disclosure. Two days later, the Network for Greening the Financial System (NGFS), which brings together 34 financial regulators, issued a call for climate action as well. On March 20, Australia’s Prudential Regulation Authority had already announced that it will increase its scrutiny of how banks, insurers and pension funds manage the financial risks of climate change.

So far, the regulatory requirements have been rather vague and focused on insurers’ investment portfolios. Yet the Bank of England made it clear that over the coming year it would “embed more granular requirements into our policy, to bring industry in line with our evolving expectations”.

Regulators are very clear that insurers and banks need to act right away. Sarah Breeden, an executive director at the Bank of England, warned that “it is better to be roughly right now not precisely right when it is too late”, because “the window for [an] orderly transition is finite and closing”. And the chair of the NGFS stressed that “a transition to a green and low-carbon economy is not a niche nor is it a ‘nice to have’ for the happy few. It is critical for our own survival. There is no alternative.”

Unfriend Coal campaign asks insurers to scale up climate action

Fifteen NGOs supporting the Unfriend Coal campaign have warned insurance CEOs that they would increase public pressure on companies that do not end their support for coal, and would extend their scrutiny of Asian and North American companies.

In a letter to 30 leading insurance companies, the NGOs asked for immediate action to: stop insuring coal and tar sands projects and companies; start divesting from these companies; align all business activities with the goal of limiting global warming to 1.5°C; and bring stewardship activities in line with the goals of the Paris Agreement.

Like in 2017 and 2018, the insurers’ response to the letters will form the basis of the annual Unfriend Coal scorecard report on insurance, coal and climate change, which will be published in early December.

Brokers urged to come off the fence on coal and climate change

Unlike insurers, brokers have so far not taken any action to phase out coal, arguing that their first obligation is to their customers, including coal companies. Yet if climate change spirals out of control, fewer and fewer people and businesses will be able to access insurance irrespective of the best efforts of their brokers. In an op-ed piece in Insurance Age, Unfriend Coal coordinator Peter Bosshard argues that brokers need to take these broader interests into account as they consider their position on coal.

Among other steps brokers need to immediately stop brokering contracts for new coal projects and customers; desist from helping coal companies circumvent insurers’ coal restrictions; and terminate their services for existing coal customers within two years. The Unfriend Coal campaign will assess the coal and climate policies of brokers as part of its scorecard report this year.

  Dodgy deal of the month: ask Liberty Mutual not to insure Adani!

The Adani Group’s giant proposed Carmichael coal mine in Australia would emit up to 4.6 billion tons of CO2 over its lifetime. The Adani mine depends on insurance to move forward, but so far 15 insurance companies have pledged not to insure the project or have adopted policies to this effect.

Liberty Mutual is one of the main coal insurers which have so far not ruled out support for the Adani mine. Digital campaign group SumOfUs has launched an online petition asking Liberty Mutual not to insure the project, which has already garnered more than 40,000 signatures and which you can sign here.

  • Insurance & Climate Risk Americas/EMEA: two conferences organized by InsuranceERM and Environmental Finance in New York on September 16 and in London on December 2
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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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