Insurers' anti-coal stance will pay off, analysts say

Insurers have been providing less and less cover energy providers committed to coal, in a move that means insurers will lose out in the short-term, but with considerable long-term benefits.

This is according to research conducted by analysts at GlobalData, whose insurance specialist Daniel Pearce points to the reputational benefits of eschewing fossil fuels.

“With climate change potentially causing the increased frequency of extreme weather events and rising sea levels, ceasing protection for fossil fuel-based energy providers may enable the industry to benefit from reduced exposure to potential environmental liability risks and enhance its public reputation,” he says.

AXA is extending its climate change policy to its recently acquired XL division. As a result, XL will no longer insure any construction projects related to coal-fired power plants and the extraction of tar sands -- a move that is expected to drive around £92m loss in revenue, mainly in 2020. Meanwhile Chubb recently announced a ban on coal-related underwriting and investment. The company will no longer provide insurance or investments to companies that operate coal-fired plants, or to firms for which coal mining generates more than 30% of revenue. According to Moody’s, there has been no meaningful loss of business for the handful of providers that have taken such action.

Pearce adds: “On the surface, distancing itself from coal may have a significantly negative impact on the insurance industry, given the loss of business. However, in addition to the possible progress in consumer perception, the industry may in fact enjoy a considerable financial benefit in the longer term as a result of any anti-coal stance.”

    Share Story:

Recent Stories