latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/insurers-pledging-to-abandon-coal-sector-doubled-in-2019-activists-report-55772765 content esgSubNav
In This List

Insurers pledging to abandon coal sector doubled in 2019, activists report


Debt Ceiling Debate: IR Teams Should Prepare for Potential Market Downturns


Insight Weekly: Loan-to-deposit ratio rises; inventory turnovers ebb; miners add female leaders


Insight Weekly: Sustainable bonds face hurdles; bad loans among landlords; AI investments up


No disruption on the road to digitization

Insurers pledging to abandon coal sector doubled in 2019, activists report

The number of insurance companies withdrawing coverage for the coal sector doubled in 2019, activists behind a campaign to drive a wedge between coal producers and insurers reported.

U.S. insurers continue to lag peers in Europe, but a movement embracing policies that would exclude coal producers continued to gain steam in 2019. About 46% of the reinsurance market and 37% of the insurance industry's global assets fall under plans to exit involvement in the coal sector, the Unfriend Coal campaign wrote in a new scorecard of the insurance industry.

"We've seen a momentum on a different level this year," Peter Bosshard, coordinator of the Unfriend Coal campaign and author of the report, said in an interview. "It has become physical for so many people — whether you live in California in the Bay Area or the Midwest where the floods didn't stop this spring and summer or in the Plains or the southeastern U.S. — so many people were confronted with the impact of a changing climate in unprecedented ways. A lot of people are freaking out, and rightfully so."

Elana Sulakshana, an energy finance campaigner with the Rainforest Action Network, listed the wildfires in California as an "immediate and terrifying" example of the impact of the climate crisis that is causing insurers to raise rates and issue nonrenewals of coverage.

Unfriend Coal reported that 17 of the world's largest insurance players have rolled out coal exit commitments as of mid-November. Most of the policies refuse to insure new mines and power plants. However, the organization awarded the highest rankings to insurance companies such as Swiss Re AG and Zurich Insurance Group AG for policies that end coverage of existing coal projects and the companies behind them.

French insurer AXA SA recently revealed that it is targeting a complete coal exit in countries within the EU and the Organisation for Economic Co-operation and Development by 2030 and the rest of the world in 2040.

Insurers are also moving away from investments in coal. At least 35 companies with combined assets of roughly $8.9 trillion have adopted coal divestment plans, Unfriend Coal said in a news release. An S&P Global Market Intelligence analysis of U.S. regulatory data in August showed that the 20 insurers with the most coal exposure held, as of 2018, a cumulative $40.30 billion in investments in companies that mine coal or power producers that generated more than 30% of their electricity from the fuel in 2017.

The movement began with a focus on European companies but recently shifted to a focus on the U.S. Earlier in 2019, Chubb Ltd. became the first major U.S. insurer to announce a coal exit policy. AXIS Capital Holdings Ltd. is also restricting coverage for projects and companies involved in coal or tar sands oil extraction, which Sulakshana applauded as "one of the best yet."

Activists are now focusing on larger insurance industry targets in the country that have not announced similar policies such as Liberty Mutual, American International Group Inc. and Berkshire Hathaway Inc. Seven of the 10 lowest-ranking companies in the assessment are based in the U.S., the group noted.

"AIG and Liberty Mutual are among the biggest international insurers that still insure coal, and they are among the rare players which can take the lead in conducting due diligence for multi-billion dollar coal projects," a summary of the report stated. "Both can expect strong public pressure in the coming year from the Insure Our Future campaign."

Insure Our Future, a U.S.-focused effort of the Unfriend Coal campaign, recently launched a campaign against Liberty Mutual, including protests at the company's Boston headquarters.

Coal producers are finding it generally more challenging to find insurance and banking services willing to take the risk on a sector plagued by financial challenges and environmental risks.

"There's just the general disposition of the insurance markets against the coal industry are making it tougher to find carriers," Contura Energy Inc. Executive Vice President and CFO Andy Eidson said said on a Nov. 15 earnings call. "Therefore, collateral requirements are going up commensurate with that."

SNL Image