Lloyd’s, Munich Re, Zurich and Chubb criticised for insuring Trans Mountain tar sand pipeline

Lloyd’s has been revealed as the biggest insurer of Canada’s controversial Trans Mountain tar sand pipeline, followed by Munich Re, with Zurich and Chubb not far behind and increasing their participation in the programme. The majority of the insurers are European and the deal was brokered by JLT before it was taken over by Marsh. The news comes despite the fact that both Zurich and Munich Re have announced policies to limit their protection of tar sands. However, Lloyd’s, Chubb and other insurers on the slip do not even have such a policy in place. Canadian tar sands are one of the highest-carbon sources of oil on the planet. A recent report by the financial thinktank Carbon Tracker finds that no new tar sands projects are consistent with the Paris Agreement climate targets and high production costs mean any new investments risk becoming stranded assets. The Trans Mountain pipeline currently carries types of crude oil and refined products to British Columbia from Canada’s main oil-producing province of Alberta. But it is pressing ahead with plans to expand its pipeline, connecting tar sands in Alberta to the Pacific coast outside Vancouver. This is projected to add an extra 590,000 barrels a day of capacity – the equivalent of putting 2.2 million cars on the road. Owned by the Canadian government, Trans Mountain has become a focus for environmental and indigenous groups that want its expansion stopped. The Canadian government has been heavily criticised for backing the project, which seems at odds with its Paris Agreement commitments. Insurance companies have come under increasing pressure not to cover the pipeline or expansion project. But Trans Mountain’s certificate of insurance was filed with Canada’s energy regulator at the end of last month and reveals that insurers are still backing the pipeline, and some with increasingly large support. According to 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 – insurance companies provided Trans Mountain with $508m of liability insurance for the 12 months to 31 August 2020. The certificate shows that European insurers are the biggest backers. This is despite the fact they have generally led the pack in making commitments to help tackle climate change and reduce Co2 emissions. According to Unfriend Coal, the certificate of insurance shows the following cover. Lloyd’s syndicates have the largest stake and have underwritten $460m. They are solely responsible for $50m and have underwritten the rest jointly with other insurers. Zurich has increased its support “significantly”, despite adopting a policy against insuring tar sands infrastructure last year. It is solely responsible for $8m of cover but since last year has doubled the amount it provides jointly with other insurers to $300m. Munich Re developed a policy on tar sands insurance last year but its Canadian subsidiary Temple Insurance remains Trans Mountain’s third biggest insurer, providing $250m of cover with other insurers. Chubb’s European operations have also increased their support “significantly” since last year when Chubb Europe provided $15m of cover, said Unfriend Coal. As well as renewing this figure, Chubb European Group is also underwriting $185m with other insurers. Seven other insurers are listed on the certificate of insurance. These are: Liberty Mutual, Energy Insurance Mutual, AIG Insurance Co. of Canada, Stewart Specialty Risk Underwriting, WR Berkley, HDI Global SE of Canada and Starr. Elana Sulakshana, energy finance campaigner at Rainforest Action Network, said: “If insurers are serious about avoiding catastrophic climate change, they must align all business with a 1.5°C pathway. Any company that claims to care about the climate and human rights cannot insure Trans Mountain while it presses ahead with plans to enable a huge expansion of some of the world’s dirtiest oil and ignores the opposition of First Nations whose traditional lands the pipeline crosses.” Seven insurers have so far announced policies limiting insurance for tar sands operations. These are: AXA, AXIS Capital, Generali, The Hartford, Munich Re, Swiss Re and Zurich. In June 2019, Zurich became the first insurer to sign the Business Ambition for 1.5°C Pledge and announced a package of measures to restrict support for the most carbon-intense fossil fuels. This included an end to underwriting operators of oil sands pipelines. However, it said it would engage with clients during a two-year period with the aim of driving plans to “reduce their exposure to thermal coal, oil sands and oil shales”. Peter Bosshard, international coordinator for Unfriend Coal, said: “Zurich and Munich Re have recognised the risks from high-carbon tar sands, and together with Chubb and Liberty Mutual have restricted cover for coal. However, their choice to continue or even increase their support for Trans Mountain calls into question their commitment to supporting international climate targets in practice.” But Lloyd’s came in for the biggest criticism. “Are there no risks to our climate that Lloyd’s won’t insure? Lloyd’s has signed the Paris Pledge to support international climate targets, yet Lloyd’s insurers continue to underwrite activities that fuel the climate crisis. It’s time the Lloyd’s Council put policies in place that are in line with climate science,” said Lindsay Keenan, European coordinator for Unfriend Coal. A Lloyd’s spokesperson said the issue is more complicated for the marketplace than single insurers because it is made up of different underwriters. The spokesperson 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. While 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.” Munich Re, Zurich and Chubb declined to comment.

Lloyd’s, Munich Re, Zurich and Chubb criticised for insuring Trans Mountain tar sand pipeline

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