62% of reinsurers have coal exit policies, 38% have oil, gas exclusions

Restrictions by insurance companies on oil and gas are starting to catch up with those on coal, according to new data from the Insure Our Future campaign, comprising nongovernmental organizations and social movements that monitor the insurance industry’s role in the climate crisis.

At the time of last year’s Conference of the Parties from Oct. 31-Nov. 13, 2021, only Suncorp, Generali and Axa SA had adopted any restrictions on insurance of conventional oil and gas projects. But in the past year, Allianz SE, Aviva, Fidelis, Hannover Re, KBC, Mapfre, Munich Re, SCOR, Swiss Re and Zurich have followed suit, IOF says in a statement. 

As a result, the market share of insurers with oil and gas restrictions has grown from 3% to 38% among reinsurers, and from 5% to 15% among primary insurers. Eighteen insurers have ruled out support for Canada’s Trans Mountain pipeline and 18 have pledged not to get involved in the East African Crude Oil Pipeline either. 

While the number of oil and gas restrictions is growing, the quality is very uneven. Aviva and Hannover Re have the strongest policies, but are not major actors in the oil and gas sector. More significantly, Munich Re, Swiss Re and Allianz adopted ambitious policies with commitments to stop insuring most or all new oil and gas production projects.

In contrast, Axa and Zurich, both major oil and gas insurers, took only minor steps with commitments to end insurance for oil exploration, but not for new oil production or for gas exploration or production. Meanwhile, major fossil fuel insurers like American International Group Inc., Chubb Ltd., Lloyd’s of London and Tokio Marine have not yet adopted any restrictions on conventional oil and gas.

Coal

Coal, meanwhile, has become increasingly uninsurable outside of China. The number of coal exit policies has grown from 35 to 41 this past year, with major U.S. insurers AIG and Travelers Cos. Inc. finally joining the fray. The market share of insurers with coal exclusions has reached 62% in the reinsurance and 39% in the primary insurance markets. Many of the remaining insurers without coal exclusions are not active in the fossil fuel sector and the remaining coal insurers lack the expertise or capacity to underwrite large new coal power plants outside China, the IOF report says.

Ahead of COP27 in November 2022, the campaign coalition argues that insurers must now fully exit new coal, oil and gas, and demonstrate that the industry is ready to deliver on its net zero commitments, says IOF. 

COP27 stands for the 27th Conference of the Parties of the United Nations Framework Convention on Climate Change.

Annual scorecard 

IOF’s annual scorecard ranks the top 30 global fossil fuel insurers on the quality of their fossil fuel exclusion policies. 

This year, Allianz, Axa and Axis Capital rank best for their coal exit policies, while Aviva, Hannover Re and Munich Re come out on top for their oil and gas exclusions. 

At the bottom of fossil fuel rankings are a group of insurers that have yet to adopt any restrictions on providing cover to coal, oil or gas projects, including U.S. insurers Berkshire Hathaway Insurance Co. and Starr and Bermudian reinsurer Everest Re. Lloyd’s of London also has a weak showing, having announced a coal exit framework in 2020 that it declared is optional. 

Liberty Mutual Insurance Co., Chubb and Tokio Marine have adopted some restrictions on coal but actively insure the expansion of the oil and gas industry. Chinese insurers PICC and Sinosure have not adopted any fossil fuel restrictions but, following Chinese government policy, will no longer cover new coal power plants overseas.