Insurer restrictions on oil and gas are starting to catch up with those on coal, according to new data from the Insure Our Future campaign, a group of NGOs and social movements monitoring the role of the insurance industry in the climate crisis.
At the time of last year’s COP from Oct. 31-Nov. 13, 2021, only Suncorp, Generali and Axa SA had adopted any restrictions on the 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, the IOF said in a statement.
As a result, the market share of oil and gas restricted insurers has increased 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 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 players 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 terminate insurance for oil exploration, but not for new oil production or for gas exploration or gas production. Meanwhile, major fossil fuel insurers such as American International Group Inc., Chubb Ltd., Lloyd’s of London and Tokio Marine have yet to adopt any restrictions on conventional oil and gas.
Coal, meanwhile, has become increasingly uninsured outside of China. The number of coal exit insurers has increased from 35 to 41 in the past year, and major US insurers AIG and Travelers Cos. Inc. has finally joined the fray. The market share of insurers excluding coal has reached 62% in the reinsurance market 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 of China, the IOF report said.
Ahead of COP27 in November 2022, the campaign coalition argues that insurers must now fully divest from new coal, oil and gas, and demonstrate that the industry is ready to deliver on its net zero commitments, the IOF says.
COP27 stands for the 27th Conference of the Parties to the UN Framework Convention on Climate Change.
The 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 collective exit policies, while Aviva, Hannover Re and Munich Re come out on top for their oil and gas exclusions.
At the bottom of the fossil fuel ranking is a group of insurers that have yet to impose any restrictions on providing coverage for coal, oil or gas projects, including US insurer Berkshire Hathaway Insurance Co. and Starr and Bermudian reinsurer Everest Re. Lloyd’s of London also has a weak showing, having announced a 2020 coal exit framework that it declared optional.
Liberty Mutual Insurance Co., Chubb and Tokio Marine have adopted some restrictions on coal but are actively insuring the expansion of the oil and gas industry. Chinese insurers PICC and Sinosure have not adopted any restrictions on fossil fuels but, in line with Chinese government policy, will no longer cover new coal-fired power plants abroad.