During a panel at the World Economic Forum in Davos, Switzerland, the CEO of one of the largest global insurers said the insurance industry cannot go "cold turkey" on coal, noting that a transition away from fossil fuels is necessary.
"We realize that transition is required here," American International Group Inc. CEO Brian Duperreault said. "You have to go from fossil fuel to something else."
But Duperreault noted that the world is still "demanding" fossil fuel and that coal is being taken out of the ground because there is a need for it.
"You can't just cold-turkey it now," he said, reiterating the need for transition. Duperreault added that he thinks insurers should go to those who are also looking to transition their companies away from fossil fuels, whether they produce it or use it.
"We need to be part of the solution here, and I think a simplistic 'no' is too imprecise and impractical," Duperreault said. "It doesn't get the job done that we need to get done as a world."
Several insurers have recently taken positions regarding their exposure to coal. Overall, the number of insurers pledging to abandon the coal sector doubled in 2019, according to a report by activists.
Dutch insurer Aegon NV announced in early January it would be gradually reducing its coal investments over the course of the next decade. Several other major European insurers such as Allianz Group, Generali, Hannover Re, Swiss Re AG and Zurich Insurance Group AG have also released policies that restrict their association with coal, but U.S. insurers have generally been slower to push coal away.
An S&P Global Market Intelligence analysis of U.S. regulatory data found that many insurers hold significant investments in companies that depend on coal as a source of revenue.