Generali exits cover for new oil and gas expansions

Italian insurer Generali has announced it will no longer underwrite new projects for oil and gas expansion. The move has attracted both praise and criticism from campaign groups who believe it does not go far enough.

The policy, which Generali said will target ‘transition laggards’, includes projects for new liquefied natural gas (LNG) terminals and gas-fired power plants. Generali had already committed to no longer underwrite risks related to projects involving new or upstream oil and gas fields but this has now been extended to cover midstream and downstream oil and gas expansion projects.

According to campaign group Insure our Future, Generali is the first global insurer to adopt such a policy and marks a “major step forward in driving climate action”.

Insure our Future, an NGO that has lobbied insurers to end their support for oil and gas expansion, has called on other major insurers to follow suit, naming Chubb, Allianz, AXA and Sompo in its statement.

However, the group has also called out a potential problem in Generali’s intention to continue insuring some companies looking to expand existing oil and gas projects. The policy to exclude midstream and downstream oil and gas expansion projects will target ‘transition laggards’, which campaigners argue could see other companies continue to be insured by Generali.

“Generali appears to believe that companies developing new midstream infrastructure could still achieve net zero by 2050,” stated Insure our Future. “But the International Energy Agency’s net-zero scenario is clear that any new oil and gas field or LNG export terminal threatens the achievement of the net-zero goal.”

Despite pointing out the limits of the policy, Insure our Future has welcomed the move from Generali and the impact of no longer insuring new LNG terminals, given that LNG producers are planning to triple global production capacity.

“Generali’s announcement is a first for the insurance world and a step forward, but it does not go far enough,” said Reclaim Finance insurance campaigner Ariel Le Bourdonnec.

He said that the policy “leaves the door open” to new developments related to oil and gas. “Generali seems to think that a company developing new oil and gas projects can be in transition. But the science is clear. There is no room for new oil and gas projects if we want to preserve an insurable world,” said Le Bourdonnec.

Generali has also introduced restrictions on its investment portfolio, stating that it will no longer invest in bonds issued by transition laggards. According to Antonio Tricarico from campaign group ReCommon, the move is a “clear signal to the market that long-term risks associated with oil and gas expansion have become too high”.

“Italian financial institutions should recognise this and stop financing the new gas infrastructure of Italy’s fossil giant, Eni, in line with the International Energy Association’s recommendation to keep global warming under 1.5°C.”