Insurance contracts obtained by the Insure Our Future campaign show how utilities are struggling to find companies to underwrite new coal power projects, reveals a report Exposed: The Coal Insurers of Last Resort. Details of which companies insure which projects are rarely disclosed, so the contracts for KEPCO, Korea’s national power utility, give a unique snapshot of the market. At least 39 insurers have now ended or limited cover for coal, and projects are increasingly insured by a “haphazard coalition” of a few global laggards, small specialty insurers and companies from the Global South.
Insurance for new coal power
- Four years after KEPCO insured construction of the Nghi Son 2 coal power plant in Vietnam, 72% of the insurance capacity which underwrote that project has been withdrawn.
- Five “coal insurers of last resort” provide 72% of the insurance capacity for new coal projects still available today: US companies Starr, Berkshire Hathaway and Liberty Mutual; Allied World in Bermuda; and insurers in the Lloyd’s market.
- 13 insurers operating on the Lloyd’s market provided 27.3% of cover ($1,187m) when KEPCO insured construction of its Vung Ang 2 coal power plant in Vietnam in October 2021. Lloyd’s has ruled out insuring new coal projects from 2022, but does not require insurers in its market to follow the policy.
Insurance for operating coal power
- In June 2021, KEPCO had to find 24 different insurers to cover the operation of its Cebu Naga power plant in the Philippines. Eleven were not insuring any other KEPCO projects and one, New India Insurance, lacks the A-credit rating that project financiers typically expect insurers to provide.
- Leading brands with commitments to no longer underwrite new coal projects insured the project even though KEPCO has no credible plans to phase out coal production in line with the 1.5°C Paris Agreement target: Hannover Re (Germany) provided $31m of cover, QBE (Australia) $26m, Helvetia (Switzerland) $23m and SCOR (France) $17m.