Insurance firm Lloyd’s of London is becoming one of the ‘last resorts’ for fossil fuel generators as others worldwide are refusing to cover coal projects.
This year saw total number of insurers who would not insure coal projects double, with US companies also withdrawing support for the first time.
A new report rating the world’s top 35 insurance companies on their actions regarding fossil fuels has described coal as being “on the way to becoming uninsurable”.
Coal-burning is believed to be the single largest factor in the current climate crisis, and the vast majority of coal projects cannot be built, financed, or operated without an insurance policy.
The Unfriend Coal campaign, which is backed by Greenpeace and Client Earth along with another 11 environmental groups, will launch their report in London this coming Monday at an insurance and climate risk conference.
The campaign said that ten new firms restricted the insurance that they provide to companies building or operating coal-based power plants this year. This takes the global total to 17.
The initial group of insurance companies refusing to support coal were all European, but this year saw the first US insurers follow Europe’s lead when Axis Capital and Chubb both pledged to restrict their services for coal projects. Australian companies Suncorp and QBE have also followed suit.
35 insurers have begun to divest from coal investments. These companies have combined assets of just under $9tn, comprising roughly 37% of the industry’s global assets. This is up $3tn from last year when 19 insurers with combined assets of $6tn had pulled out of fossil fuels.
One of the Unfriend Coal campaign co-ordinators, Peter Bosshard, said: “We hope within two to three years it will be so difficult to obtain insurance that most coal projects won’t be able to go forward.
“We’ve seen the acceleration [in insurers divesting from coal] for a good reason – people are freaking out”.
Lloyd’s of London is the only major European company which has yet to divest from fossil fuels. Bosshard said the world’s largest insurance market had a crucial part to play:
“Together with Asian insurers, the Lloyd’s market is becoming the ‘insurer of last resort’ for a dying and destructive industry”.
Lloyd’s themselves began to exclude coal investments in its own mutual fund in April of last year, however it has ruled out issuing guidelines to its member syndicates on whether they should refuse to underwrite coal projects.
The insurer 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.
“Whilst 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”.
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