The New Jersey-headquartered insurer Chubb announced this week that it will no longer underwrite the construction and operation of new coal-fired power plants or new risks for companies that generate more than 30% of their revenue from coal, making the insurer the next in a long line of financial and insurance institutions waving goodbye to coal.
Chubb, the world’s largest publicly traded property and casualty insurance company and the market leader in insuring the US power sector, announced on Monday that it had adopted a new policy which will see it no longer underwrite the construction and operation of new coal-fired plants or new risks for companies that generate more than 30% of their revenues from coal mining or energy production from coal.
Further, and more importantly, insurance coverage for existing coal plant risks which exceed the new 30% threshold will be phased out by 2022, and for utilities beginning in 2022. Chubb will also not make any new debt or equity investments in companies that generate more than 30% of revenues from thermal coal mining or energy production from coal.
“Chubb recognizes the reality of climate change and the substantial impact of human activity on our planet,” said Evan G. Greenberg, Chairman and CEO of Chubb. “Making the transition to a low-carbon economy involves planning and action by policymakers, investors, businesses and citizens alike. The policy we are implementing today reflects Chubb’s commitment to do our part as a steward of the Earth.”
As is always the case with these finance and insurance company policies regarding exposure to coal, there are several exceptions. With regards to new coal plant construction and operation, Chubb explains that it will consider exceptions until 2022, with the exceptions including regions that do not have practical near-term alternative energy sources and the insured company’s commitments to reducing their dependency on coal. Similarly, Chubb will also “take into account” the viability of alternative energy sources for utilities that generate more than 30% of their revenues from coal.
Chubb’s decision was widely praised by environmental groups.
“With this policy, Chubb has become the first major U.S. insurance company to acknowledge the key role the insurance industry has to play in stopping the climate crisis,” said Lindsey Allen, Executive Director of Rainforest Action Network. “New coal projects cannot be built without insurance, and Chubb just dealt a blow to the dozens of companies that are still betting on the expansion of coal globally. We are encouraged to see Chubb taking real action to address climate change and insure a healthier future.”
“Chubb’s announcement is a clear sign that coal is becoming uninsurable worldwide,” said Mary Anne Hitt, Director of the Sierra Club’s Beyond Coal campaign. ”15 European and Australian insurance companies already restrict insurance to the coal industry. With the U.S. industry joining this global trend, governments and power utilities should see that the industry is moving beyond coal.”
Chubb and its subsidiaries currently invest at least $2.9 billion in fossil fuel companies — according to the California Department of Insurance’s Climate Risk Carbon Initiative database — and, over the past 9 months, the company has come under increasing pressure from members of the Insure Our Future campaign which seeks to stop the US insurance industry from insuring and investing in coal and tar sands projects and companies.
“A major U.S. insurer like Chubb restricting insurance for coal projects and companies is a game-changer. Now the company needs to strengthen its policy to exclude new coal mines, fully phase out coal across all underwriting and investment activities in line with the Paris Agreement, and stop insuring the destructive tar sands sector, ” said Ross Hammond, Senior Strategist for the Insure our Future campaign. “All eyes are on Liberty Mutual, AIG, and the rest of the U.S. insurance industry to join Chubb in acknowledging the role they have to play in stopping climate change by ending their support for fossil fuels.”