Hannover Re will continue to provide coverage for clients that insure coal-related risks, despite pressure on reinsurers to pull back, CEO Ulrich Wallin said.
Speaking to journalists at the Monte Carlo reinsurance Rendez-vous on Sept. 10, Wallin said: "We will continue to support our clients regarding coal power plants and coal mines to the extent that those [plants and mines] are meeting all the necessary regulatory and legal requirements."
Wallin's comments come as the re/insurance industry continues to face pressure from Unfriend Coal, a coalition of nongovernmental organizations and social groups that aims to stop insurers investing in coal-related assets and covering coal-related risks.
Swiss Re AG announced in July that it would no longer provide insurance or reinsurance to businesses with more than 30% thermal coal exposure across all lines of business. Scor SE said in September 2017 that it would no longer provide insurance or facultative reinsurance "that would specifically encourage new greenfield thermal coal mines or stand-alone lignite mines or plants."
According to Unfriend Coal, Hannover Re has stopped investing in companies that derive more than 25% of annual revenues from thermal coal extraction and power generation. But the company has not taken action on the underwriting side.
Wallin said he agreed with the sentiment of Unfriend Coal's ambition to tackle global warming, describing it as "quite an applaudable goal." But he said the argument about whether to generate electricity from coal and allow companies to open more coal plants was "first and foremost a political question," and that he is "not a great fan" of putting indirect pressure on insurers to stop writing business that is "perfectly legitimate and legal in the environment in those countries in order to indirectly achieve a political goal."
He added, "We still feel that if those facilities are government-approved and meet all the regulatory requirements, it is better to have them insured than not insured."
Wallin also said a recent report showed that insurance capacity to cover coal-related risks was still "very sufficient" and that the risks could be placed at "competitive prices."