Major European insurers and reinsurers are restricting their underwriting of coal exposures amid significant investor and environmental nonprofit pressure, but the trend has not affected the ability to insure coal businesses, as capacity remains plentiful in a still-competitive market.

U.S. insurers are stepping into the void created by the exit of their European counterparts, but observers say capacity challenges could emerge if similar pressure mounts in the United States or Bermuda.

Munich Reinsurance Co. became the latest European insurance sector entity to announce it would restrict its underwriting of coal projects, following in the footsteps of Allianz S.E., Axa S.A., Scor S.E., Swiss Re Ltd. and Zurich Insurance Group Ltd. While some of these policies apply to both existing and new coal mines and plants, other policies take a more nuanced approach, particularly when it comes to coal facilities in developing countries.

Axa has stopped underwriting construction coverage for any new coal plant or mine, regardless of region or client, according to its policy. Axa will not stop underwriting property assets of existing coal plants or mines in developing countries with limited or no other energy options, but will not underwrite such risks in emerging economies with a choice in their energy mix, said Sylvain Vanston, Parisbased Axa’s sustainable business officer.

“We would not consider China as a country that doesn’t have a choice,” he said. “But Botswana is a different issue.” Insurers and reinsurers may rightly exempt developing countries because they need coal to support their growing populations and do not have access to other

inexpensive fuel options, said Ryan Brown, St. Louis-based senior vice president and lead of the mining practice of Lockton Cos. L.L.C. and the former director of insurance and enterprise risk management for coal producer Peabody Energy Corp.

But Lucie Pinson, the Paris-based European coordinator of the Unfriend Coal campaign, rejected that argument, particularly in light of “collapsing prices” for renewable energy. “There shouldn’t be any geographic exemptions,” she said.

Andrew Baillie, Arlington, Virginiabased vice president of AES Global Insurance Co., a captive owned by global power company AES Corp., cited this “social-economic lobbying pressure because everyone thinks energy companies are bad and there’s a lot of pressure groups now putting pressure on insurers” as a challenge in obtaining coverage for energy risks at the Vermont Captive Insurance Association conference in August.

However, the retreat by big-name insurers and reinsurers has not yet had a major impact on the ability to secure coverage for coal exposures because of an abundance of available capacity, brokers say.

“You still haven’t seen a real tightening of capacity,” said Fred W. Smith IV, senior vice president and head of U.S. mining and metals at Willis Towers Watson P.L.C. in Knoxville, Tennessee. “Similarly, we haven’t seen the domino effect take hold, which is something we were certainly concerned about. The ultimate outcome of this Unfriend Coal movement and these pressures by (nongovernmental organizations) is certainly not done, but to this point U.S. insurers haven’t been impacted.” Neither have Bermudian insurers and reinsurers, even though some large coal accounts placed by Willis Towers Watson secure about a third of their coverage in Bermuda, he said.

European insurers and reinsurers pulling back from coal underwriting are not completely withdrawing from the market.

For example, they may stop writing property or liability risks but still write workers compensation and surety bonds. In those scenarios, however, some insurance buyers have drawn their own lines, brokers say.

“We have seen some of the insureds take a point of view that ‘if you’re going to take a position to divest yourself from our industry, then go ahead and divest yourself from our industry,’” Mr. Smith said. “There’s a desire to move everything away from them, even if these companies might still maintain coverage in certain areas.”

Some U.S. insurers see the European withdrawal as an opportunity to grow their market position, Mr. Brown said. “Their loss of premium by taking this position is someone else’s gain,” he said.

“An American voice is missing in this debate,” Axa’s Mr. Vanston said. Integration of environmental, social and governance factors in corporate policies is “less mature in America than it is in Europe. That’s a fact. Let’s just hope that gradually every player understands their own interest in boarding the train.”

Brokers are watching to see if the lobbying pressure starts to spread beyond Europe. “Does it move to Bermuda?” Mr. Smith said. “Does it move to the U.S. industry? Because then you’ll start to have a bit of a bigger problem.”