Lloyd’s, AIG and others can expect further pressure on coal policy in 2020

Lloyd’s insurers can expect to come under increased pressure from activists attempting to pressure the insurance sector to stop covering the coal industry, as the market stands accused of being the only major European carrier still keen to cover the sector and “opportunistically” take advantage of commitments from rival insurers to pull back. Pressure group Unfriend Coal, a global coalition of NGOs and social movements created to pressure insurance companies to exit the coal business and support the transition to clean energy, reports good progress during 2019 in its latest outlook. But it will clearly not let up the pressure. Lloyd’s and AIG, which the group says are seriously lagging behind peers in their approach to the coal sector, can expect to be in the firing line this year. Spanish insurer Mapfre is another leading carrier that can expect to be in the limelight for its supposedly inadequate response. “The insurance industry’s shift away from coal, the biggest source of CO2 emissions, is accelerating. When we launched our 2019 coal insurance scorecard in early December, we were excited to see that since April 2017, 17 insurers had withdrawn from the coal sector. What used to be a European phenomenon had also ignited action among Australian and US carriers,” said Unfriend Coal. “Little did we suspect that before the year was out, two more insurers would join the trend in the form of Liberty Mutual, a global specialty insurer, and The Hartford, a large P&C insurer in the United States. With these additions, insurance companies withdrawing from coal now account for 13.6% of the global insurance and 47.6% of the reinsurance market (measured by non-life premium income),” continued the group. Willis Towers Watson has stated recently that it is becoming more difficult and expensive for coal companies to access insurance, putting them at a disadvantage with renewable energy providers. A big success for Unfriend Coal last year was action taken by leading US insurers that, up to this point, had failed to act as swiftly as their European peers. But AIG is singled out as one leading US insurer that has so far failed to act decisively and now finds itself in an “indefensible” position, claimed the group. “First, with Chubb, AXIS Capital, Liberty Mutual and The Hartford taking action, the shift away from coal has firmly established itself in the US insurance industry. The position of AIG, which according to Finaccord ranks among the three biggest coal insurers worldwide, has become indefensible. Even national carriers such as Travelers and Nationwide will be at pains to justify their lack of a coal exit policy now that The Hartford has moved,” noted Unfriend Coal’s 2020 outlook statement. In Europe, Lloyd’s has reacted badly to the campaign and Unfriend Coal is looking to the corporation’s management to take action on its “laggards”. “The Lloyd’s market remains the only major European provider of coal insurance. AXIS Capital was the first specialised Lloyd’s carrier to take action on coal, while other specialty insurers are opportunistically exploiting the market’s hands-off approach. More Lloyd’s insurers that have shown concern for climate risks such as Beazley, Hiscox and the Markel Corporation need to follow AXIS Capital’s lead and increase the pressure on the laggards at Lloyd’s. At the same time, the corporation’s management, as the keeper of the Lloyd’s brand, must make it clear that insuring coal is no longer compatible with the reputation of a responsible insurance provider,” stated the group. But it is Asia where least progress has been made to date and where Unfriend Coal would really like to see action this year. The major Japanese insurers such as Tokio Marine and Samsung Fire & Marine need to lead the charge, especially as they seek to gain maximum reputational advantage out of their sponsorship of the Tokyo Olympics. “Now that most global players have left the market for new coal, insurers in Asia, where 80% of the coal power plants under construction or in the pipeline are located, need to realise that covering new coal projects is incompatible with the commitments of their governments to the Paris Agreement. As a gold sponsor of the Tokyo Olympics and a member of the Japan Climate Leaders Partnership, Tokio Marine – a global top-ten coal insurer – is well placed to be the first Asian insurer to move out of coal. Samsung Fire & Marine Insurance is vulnerable to similar public pressure through its association with a global brand marketing consumer goods to a young generation,” stated Unfriend Coal. The NGO coalition is clearly delighted by recent public commitment from many of the world’s leading insurers and reinsurers to back away from the coal sector. But it points out that too many of the statements made so far are little more than “window dressing”. Those that do not take this issue seriously will be exposed, warned the group. “While the combined coal exit policies of the insurance industry are taking a toll on the coal sector, some policies amount to little more than window dressing. Liberty Mutual states that it will no longer insure new clients from the coal industry but apparently continues covering new coal projects. Spain’s Mapfre issued a broad public statement on coal but has not published a detailed policy. China’s Ping An adopted criteria on coal projects that allow two thirds of the power plants currently under construction or in the pipeline to slip through the net. Many other carriers have stopped insuring new coal projects but are not prepared to phase out support for ongoing coal operations in line with the findings of the IPCC. Campaign groups will continue to pressure these insurers to adopt policies that match international best practice,” it said.

Lloyd’s, AIG and others can expect further pressure on coal policy in 2020

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