Swiss Re’s enhanced underwriting policies for oil and gas underwriting have received praise from environmental activists for adding new momentum to the industry’s shift away from fossil fuels.
The carrier has unveiled a series of commitments in its latest sustainability report, including a target for half of its overall oil and gas premiums to come from companies aligned with 2050 net-zero commitments by 2025.
By 2030, Swiss Re said its oil and gas (re)insurance portfolios will only contain companies that are aligned with net zero by 2050 commitments.
To reach these targets, the reinsurer said it will no longer insure or directly invest in new oil and gas field projects that receive the go-ahead – through a final investment decision – after 2022.
From July 2023, Swiss Re said it will no longer provide individual insurance covers for those oil and gas companies responsible for the world’s 10 percent most carbon-intensive oil and gas production.
Swiss Re said it is also developing an approach for oil and gas in treaty reinsurance, to be finalised by 2023.
Environmental activists have welcomed the additional commitments, with Insure our Future global coordinator Peter Bosshard saying the reinsurer’s actions “send a strong message to fossil fuel companies, investors and governments that oil and gas operations need to be phased out in accordance with climate science or they may become uninsurable by the end of the decade”.
Lucie Pinson, director of Reclaim Finance, said Swiss Re is “headed in the right direction” and encouraged its peers to adopt policies to build on the carrier’s approach.
Alongside recent commitments by Hannover Re and Mapfre, the reinsurer’s strategy is an indicator that European carriers are starting to increase commitments to restrict oil and gas underwriting.
Hannover Re strengthens policy
In its 2021 annual report, Hannover Re highlighted that its facultative division will no longer take on new covers for projects associated with the exploration and development or transportation and storage of new oil and gas reserves.
The division also adopted other environmental restrictions during 2021 which mean projects will be declined if they damage protected areas such as wetlands or world cultural heritage sites.
Hannover Re’s facultative division also no longer accepts new risks for projects connected to the extraction of oil and gas in Arctic regions, including the Arctic National Wildlife Refuge in the US.
Mapfre enhances ESG commitments
Mapfre’s expanded ESG commitments have seen the carrier commit not to invest in oil, gas and coal companies that do not commit to an energy transition plan that allows global warming to be maintained at around 1.5ºC.
The Spanish carrier has also said it will also not insure any individual new offshore/onshore projects taking place in the Arctic for natural gas or petroleum extraction or transport.
Mapfre Re’s CEO Eduardo Perez de Lema said the group had taken the decision that there were “certain lines of business we do not want to work with going forward as a group”.