European (re)insurers continue to outpace their counterparts in the US and Japan in making commitments towards restricting underwriting for fossil fuels.

Fossil fuels US EU Japan

Analysis by The Insurer shows that almost all major European carriers have now introduced policies to end coal-related underwriting and investments.

Many have also introduced policies related to tar sands and some are taking early steps towards restricting coverage for oil and gas projects.

All of the big four European reinsurers have now adopted policies to exclude thermal coal standalone risks from facultative coverage, although three of the quartet do not have similar exclusions in place for treaty reinsurance.

Swiss Re is the outlier, having applied its underwriting ban on companies that derive 30 percent or more of their revenues from thermal coal since 2018 across all lines of business, including treaty.

And from 2023, Swiss Re has said it will begin tightening its treaty underwriting policy for thermal coal risks across property, engineering, casualty, credit and surety and marine cargo lines of business.

The carrier said it plans to exit all thermal coal exposure by 2030 in OECD countries, and by 2040 in the rest of the world.

Swiss Re and Munich Re are also taking the first steps towards addressing oil and gas exposures within their underwriting portfolios.

Last year Swiss Re committed to stop supporting the world’s 10 percent most carbon-intensive oil and gas producing companies by 2023.

And Munich Re has said it will reduce oil and gas direct and facultative exposures to the extent that there will be no attributable net CO2 emissions by 2050.

Among primary carriers, Aviva has led the way in terms of net-zero pledges, with the insurer saying it will reach carbon neutrality by 2040. Most industry participants who have made commitments have said they will achieve net zero by the middle of the century.

Axa has also been recognised for its progress in addressing climate risks, with the carrier ranking first in the Insure Our Future 2020 scorecard for its policies to address the phasing out of fossil fuel insurance.

Several US companies have come in for criticism, however, for their lack of progress in addressing these issues, including the likes of AIG, Berkshire Hathaway, Travelers and WR Berkley.

Japan’s big three carriers – MS&AD, Sompo Holdings and Tokio Marine – have also lagged behind their European counterparts in terms of the introduction of measures to address fossil fuel underwriting.

In Australia, Suncorp has led the way with its plans to end cover for all new oil and gas production.

Over the next two pages we provide details of progress to date among leading global (re)insurers. We will be deepening our analysis over the coming months – look out for regular updates through The ESG Insurer, our monthly digest of the industry’s efforts to meet environmental, social and governance objectives.

Coal underwriting policies for select reinsurers

Source: The Insurer and The ESG Insurer. Unauthorised copying forbidden without prior written permission. Please contact Spencer Halladey on spencer.halladey@wbmediagroup.com

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