US insurers join retreat from European insurers meaning coal projects cannot be built or operated

This article is more than 9 months old

This article is more than 9 months old

The number of insurers withdrawing cover for coal projects more than doubled this year and for the first time US companies have taken action, leaving Lloyd’s of London and Asian insurers as the “last resort” for fossil fuels, according to a report.

The report, which rates the world’s 35 biggest insurers on their actions on fossil fuels, declares that coal – the biggest single contributor to climate change – “is on the way to becoming uninsurable” as most coal projects cannot be financed, built or operated without insurance.

Ten firms moved to restrict the insurance cover they offer to companies that build or operate coal power plants in 2019, taking the global total to 17, said the Unfriend Coal campaign, which includes 13 environmental groups such as Greenpeace, Client Earth and Urgewald, a German NGO. The report will be launched at an insurance and climate risk conference in London on Monday, as the UN climate summit gets under way in Madrid.

The first insurers to exit coal policies were all European, but since March, two US insurers – Chubb and Axis Capital – and the Australian firms QBE and Suncorp have pledged to stop or restrict insurance for coal projects.

At least 35 insurers with combined assets of $8.9tn, equivalent to 37% of the insurance industry’s global assets, have begun pulling out of coal investments. A year ago, 19 insurers holding more than $6tn in assets were divesting from fossil fuels.

Peter Bosshard, one of the Unfriend Coal campaign co-ordinators, said: “We hope within two to three years it will be so difficult to obtain insurance that most coal projects won’t be able to go forward.

“We’ve seen the acceleration [in firms pulling out of coal] for a good reason – people are freaking out.”

As global temperatures climb, hurricanes, wildfires and floods have become more frequent and severe, resulting in higher claims bills for insurers.

Lloyd’s, the world’s biggest insurance market, is the only major European firm which continues to insure new coal projects.

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Bosshard said it had a critical role to play: “Together with Asian insurers, the Lloyd’s market is becoming the ‘insurer of last resort’ for a dying and destructive industry.”

Lloyd’s started excluding coal from its investments in its own £4bn central mutual fund in April 2018. However, its chief executive John Neal last month ruled out issuing guidelines on underwriting coal projects to its member syndicates.

Lloyd’s said: “We take climate change extremely seriously and recognise the important role insurance can play in supporting, accelerating and de-risking the transition to a low carbon economy.

“Whilst Lloyd’s Corporation does not set underwriting policy in the market, except if there is a specific legal or regulatory requirement to do so, we are nevertheless committed to building consensus across the 90-plus syndicates that operate at Lloyd’s about how we make this transition.”