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Bermuda-based insurer and reinsurer Axis Capital Holdings Ltd. on Wednesday unveiled a new policy that will see it limit its underwriting of thermal coal- and oil sands-related projects and phase out its investments in these businesses.
The new policy comes just weeks after Axis joined other global insurers in refusing to provide coverage for Adani Enterprises Ltd.’s contentious Carmichael coal mine project in Australia.
Effective Jan. 1, 2020, Axis will no longer provide new insurance or facultative reinsurance coverage for the construction of new thermal coal plants or mines and their infrastructure, or for oil sands extraction and pipeline projects, the insurer said in a statement.
Renewals will be considered on a case-by-case basis until Jan. 1, 2023, and exceptions to this policy may be considered on a limited basis until Jan. 1, 2025, in countries where sufficient access to alternative energy sources is not available, Axis said.
Axis will also cease providing coverage to, or investing in, companies that generate 30% or more of their revenues from thermal coal mining, generate 30% or more of their power from thermal coal, or hold more than 20% of their reserves in oil sands.
“We believe insurers have an important role to play in mitigating climate risk and transitioning to a low-carbon economy,” Axis President and CEO Albert Benchimol said in the statement.
“This policy is in line with our broader strategies such as reducing investments in lines that do not align with our long-term approach; investing in growth areas, such as renewable energy insurance … ; and growing our corporate citizenship program,” Mr. Benchimol said.
In July, Chubb Ltd. became the first U.S. insurer to cut back its coal underwriting and investments, following similar decisions by some of Europe’s biggest insurers and financial institutions as part of an effort to combat climate change.
A growing number of U.S. insurers are under pressure to divest from fossil fuel underwriting and investments.
A campaign to pressure U.S. insurers to divest from fossil fuel underwriting and investments is being launched, with a major insurtech company becoming the first U.S. sector player to publicly commit to such actions.