UN Secretary General Antonio Guterres has called on insurers to phase out underwriting of the fossil fuel sector in a speech yesterday to the Insurance Development Forum (IDF) Summit.
His intervention was made on the same day that it was reported that yet another insurer is abandoning its involvement in Adani’s controversial Carmichael coal mine project in Australia.
In his closing address, Guterres said: “We need net zero commitments to cover your underwriting portfolios, and this should include the underwriting of coal – and all fossil fuels. COP 26 must signal the end of coal. ”
The IDF is a public-private partnership between the insurance industry and international bodies like the UN and the World Bank. It was formally launched at the Paris COP 21 Climate Summit, and counts Axa’s chair, Denis Duverne, Aviva’s CEO, Amanda Blanc and Swiss Re’s CEO, Christian Mumenthaler among its steering committee.
Guterres also encouraged insurers to sign up to initiatives like the UN-convened Net Zero Asset Owner Alliance and direct the $35trn in assets under their collective management towards climate solutions and away from polluting economic activities.
He warned that “we are in a race against time to adapt to a rapidly changing climate”.
His caution came as trade publication InsuranceERM reported that reinsurer Ascot had confirmed that it will not renew its coverage of the Carmichael project when its current contract expires in September.
Ascot, which is owned by Canada’s largest pension plan CPP Investments, has been targeted over its support for the Carmichael project, which climate campaigners say would add 4.6bn tonnes of carbon to the atmosphere, if built.
Pablo Brait, an insurance specialist at Market Forces, a climate advocacy group based in Australia, celebrated on LinkedIn: “Adani Group has just lost a fifth current insurer.” To date, a reported 38 major insurers have ruled out underwriting the project.
“With its major contractor BMD Group (BMD) already unable to find an insurer willing to underwrite its work for Adani (and Adani taking on that risk) – this is bad news for Adani and good news for life on Earth,” Brait added.
Ascot is a syndicate member of UK insurance marketplace Lloyd’s of London. Late last year, RI reported that 17 of Lloyd’s syndicates, including two of Adani’s current insurers, had already dumped the Carmichael project following public pressure. At that time, Lloyds also announced targets for its members, including phase-out plans for insuring thermal coal, oil sands and new Arctic oil exploration.
‘We are in a race against time to adapt to a rapidly changing climate’ – UN Secretary Antonio Guterres
More is also being demanded of insurers on the West coast of the US. Yesterday, the Insurance Commissioners of California and Washington formally asked insurers in those states to report on climate risks using the Task Force on Climate-related Financial Disclosures (TCFD) framework.
In a joint statement, Insurance Commissioners Mike Kreidler of Washington and Ricardo Lara of California urged licensed insurers to substitute this year’s annual NAIC Climate Risk Disclosure Survey with a report aligned with the international climate risk management framework.
“Adopting a global standard for disclosing climate risks will put our insurance companies on the same footing with other major businesses in being financially ready for increasing climate risks,” said Lara.
The NAIC Climate Risk Disclosure Survey is sent annually to insurance companies that generate $100m or more in annual premium income in the states of California, Washington, Connecticut, Minnesota, New Mexico and New York.
US non-profit Ceres, in partnership with Kreidler and Lara, will host a webinar in June on how insurers can utilise the TCFD reporting guidelines.