The number of insurers refusing to underwrite coal plants has more than doubled in the past year as concerns about the causes of climate change grow.
More than a third of the world’s major insurers have divested from coal, campaign group Unfriend Coal claims.
At the end of 2019, 35 insurers had committed to the move with a further 10 placing additional restrictions on providing cover for the coal industry, which is seen as a major contributor to climate change.
While nearly half of the global reinsurance market now has a clear exit plan for coal investments, less than 10% of primary market insurers have followed suit.
The growing reluctance to insure coal firms has pushed premiums higher. Liability insurance costs have increased by between 5% and 10% during the past year and auto liability insurance costs between 10% and 20%, according to a Willis Towers Watson report.
“AIG and FM Global have also shaken up the markets, with both choosing to non-renew or significantly reduce capacity on programs that they have been writing 100% of for many years,” the report reads. “This has left a huge void and many miners scrambling to access dwindling capacity.” In addition, Munich Re has withdrawn from all forms of mining risk in South Africa, following three years of underwriting losses.
Campaigners hope that their efforts to target insurers could lead to fewer coal plants. One example is the planned construction of the Carmichael Mine in Australia. Having received planning permission from the Australian government, Indian miner Adani is struggling to find an insurer willing to underwrite the project. The bid has so far been rejected by 16 firms.
The planned build of the Carmichael Mine has attracted controversy, due to the potential release of 4.5 billion tonnes of carbon dioxide emissions during its lifetime and because of the impact of the construction on the Great Barrier Reef.
Jennifer Morgan, executive director of Greenpeace International, urges insurance firms to step up their efforts. “Insurance companies are as culpable for the climate emergency as the fossil fuel industry,” she said. “While they insure lives, health and property, they service a sector that is seemingly destroying all three. If they wanted to, insurers could strip fossil fuel firms of their social license and their access to finance for the benefit of people and planet.”
Peter Bosshard, co-ordinator of the Unfriend Coal campaign, added: “The role of insurers is to manage society’s risks – it is their duty and in their own interest to help avoid climate breakdown.”