Australia’s insurance giant QBE has become the first insurer outside Europe to adopt coal restrictions, in a move that will add to the pressure on Japanese, Chinese and Korean coal insurers to follow suit.
“QBE's decision to withdraw insurance from the coal industry is business and environmental good sense. Having paid out US$12.2 billion on natural catastrophe and large individual risk claims since 2011, QBE is on the frontline of climate change impacts. As the coal industry is unrepentantly a major cause of the problem, it stands to reason major insurers would withdraw their support.”
According to its new energy policy, QBE will stop providing new direct insurance services for thermal coal mines, power plants and transport networks from July 1 this year, and will have phased out all direct insurance services for thermal coal customers, except for statutory or compulsory insurance, by 2030.
In its investment business, it will withdraw all direct investment in companies that generate more than 30 per cent of their revenue from thermal coal from July 1, and introduce a 0.5 per cent limit on indirect investments through managed funds.
Although the announcement has been welcomed by environmental groups, concerns remain over details of the exclusion policy.
“As with all such cases, the devil is in the detail. QBE must clarify whether its insurance phase out will include package and company insurance as well as cover for stand-alone projects. When it comes to climate change, there is no time for loopholes and % thresholds – the time for absolute action on coal is now.”
As part of a long-running campaign, earlier this month Market Forces and publicly listed wealth manager Australian Ethical lodged a shareholder resolution calling on QBE to set targets for reducing its investment and underwriting exposure to fossil fuels in line with the Paris Agreement goal of limiting global warming to 1.5 degrees.
“Whilst this is an important decision by QBE, we will continue to press the company to implement broader policies covering all fossil fuels in order to achieve alignment with the Paris Agreement."
To date, 20 globally significant insurers with more than $6 trillion in assets and representing 20% of global insurance assets have adopted coal divestment policies, including the four largest European insurers. When smaller insurers and partial divestments are included, the total is 25 insurance companies worldwide. Eleven major re-insurers (including Allianz, AXA, Swiss Re, Munich Re, Zurich and now QBE) have restricted underwriting for coal.