Updates

NEWS ALERT: Insurers peeling away from Adani mine and Trans Mountain pipeline

August 6, 2020

In recent months insurance companies have rapidly abandoned the Adani Group’s Carmichael coal mine in Australia and the Trans Mountain tar sands oil pipeline in Canada when they were exposed by NGOs. The Trans Mountain pipeline, whose cover needs to be renewed by the end of August, has turned into a test case for insurers’ commitment to climate action.

In June, documents leaked to the Sydney Morning Herald and seen by the Insure Our Future campaign revealed that Liberty Mutual, HDI Global, XL Australia and Aspen Re were holding policies for “early works project insurance” on the Carmichael coal mine and rail network. The policies were brokered by Marsh. 

Within a week, all four insurers clarified that they would not renew their cover for Adani Australia, bringing the number of companies ruling out involvement in the project to 65. Liberty Mutual’s withdrawal from Carmichael was tainted by the news that the insurance company, through a subsidiary, wholly owns the proposed Baralaba South coal mine in Australia. If completed, the mine will produce up to 6 million tonnes of coal per year.

As reported in a previous update, the Insure Our Future campaign revealed in May that Lloyd’s, Zurich, Munich Re and Chubb were the biggest insurers of the Trans Mountain pipeline. Trans Mountain is slated to transport an increasing amount of tar sands oil from Alberta to British Columbia’s Pacific coast and is opposed by an alliance of more than 120 First Nations and Tribes. 

After a public outcry lead underwriter Zurich, which committed to phasing out cover for tar sands projects in 2019, decided that it would not renew the policy in July. German insurer Talanx also said it would stop insurance cover for the pipeline operator after dropping the expansion project in 2019 already. Munich Re signalled publicly that it would not renew support as well. Both insurers adopted tar sands exclusion policies in recent months.  

Lloyd’s, Chubb, Liberty Mutual, Energy Insurance Mutual, AIG, Stewart Specialty Risk Underwriting, W.R. Berkley and Starr are currently insuring the project and have not ruled out renewal of their cover yet. Lloyd’s in particular appears to play a leading role in underwriting fossil fuel projects which are no longer insurable by other carriers. NGOs around the world have increased the pressure on the underwriters of the Carmichael mine and the Trans Mountain pipeline. 

Today, organisations representing more than 24 million members sent an open letter to the insurers of the Trans Mountain tar sands pipeline urging them to drop the project due to concerns over climate change, Indigenous rights, environmental racism and water pollution. 

The letter, signed by more than 140 NGOs, First Nations, Indigenous leaders, physicians associations and grassroots activists, states: “Insuring tar sands pipelines demonstrates that your company is choosing corporate greed over people, and it will pose significant reputational risks to your business. We urge you to rule out insuring Trans Mountain and exit the tar sands sector entirely.”

MetLife ends new investments in coal and tar sands

In June 2020, MetLife quietly adopted an investment policy that restricts new investments in companies deriving more than 25% of their income from coal or holding at least 20% of their oil reserves in tar sands. MetLife is the first US life insurer to join the group of approximately 40 major insurers which have divested from or stopped investing in fossil fuels.

Advocates see this policy as a first step. This policy applies to MetLife’s general account, which has $467 billion under management, but not to the $134 billion which MetLife manages for institutional clients. Unlike The Hartford and many other insurers, MetLife is not divesting from coal and tar sands. According to research by Rainforest Action Network (RAN), MetLife is the largest investor in a 2019 bond offering of $2.5 billion for the Dakota Access Pipeline (DAPL).

In a statement, RAN’s Elana Sulakshana urged MetLife, Prudential, TIAA and other US life insurers “to join the growing movement and divest from all coal, oil, and gas companies that are not aligned with a 1.5ºC scenario”. The coal policy can be found in MetLife’s new sustainability report (p. 43).

UNEP launches guide to sustainable underwriting

In early June, the UNEP Principles for Sustainable Insurance Initiative together with leading insurers and research institutes launched a guide to sustainable underwriting for the insurance industry. Developed through a two-year process, the new report offers guidance on a wide range of sustainability risks including climate change, ecosystem degradation, pollution, animal welfare, child labor, controversial weapons, and bribery and corruption.

The new guide contains heat maps which identify environmental, social and governance (ESG) risks across economic sectors and business lines. It finds that mining, oil and gas, and coal construction offer particularly serious ESG risks to insurers. It does not address the issue that certain sectors (including coal) are inherently so toxic that responsible insurers will exclude them from underwriting altogether.

Do you have information to share?

Much of the insurance industry’s progress in shifting away from fossil fuels has been brought about by employees who are increasingly concerned about their companies’ role in the climate crisis and pass information on to campaigners. Do you have information you’d like to share? Please contact Mary Sweeters at mary@sunriseproject.org.au. All communication is strictly confidential.

Take action

Events

  • Sustainability in Insurance, conference organised by the Institute of Insurance Economics (in German only), September 3, 2020 in Zurich
  • Climate Risk, Sustainability and ESG 2020, conference organised by InsuranceERM and Environmental Finance (including with the presentation of Insure Our Future’s 2020 scorecard on insurance, fossil fuels and climate change), December 2, 2020 in London

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