An unexpected new actor has just joined the chorus of voices asking for the insurance industry to exit the coal sector. In an editorial the Financial Times, the world’s most influential business paper, today called steps to end coal insurance a “welcome and logical development”, which added “to the sense that the noose around the coal industry is tightening”.
“Any responsible government should be aiming to phase out phase out coal as swiftly as possible”, the Financial Times argued, “especially given the rapidly falling costs of cleaner alternatives.” Likewise, “many insurers have already stopped investing in coal. It makes little sense to adopt a policy of disinvestment unless underwriting practices also change.”
The editorial concludes that “European insurers clearly believe coal is now a bigger reputational threat than it is a commercial opportunity. Politicians should take note, and summon the resolve to hasten the demise of an industry with no long-term future.”
The opinion piece follows a news story in yesterday’s Financial Times, which documented the (partial) shift of insurers such as AXA, Zurich and Swiss Re away from the coal sector. Based on recent Unfriend Coal research, the article reported that so far, 15 insurers have pulled out an estimated $20 billion from the coal sector, and four of them have also stopped insuring coal projects to a varying degree.
The FT article finds that so far the shift away from coal has not affected “the availability or price of insurance, but that could change over the course of 2018 if more insurers join in”. According to insurance brokers, big multinational mining companies are “unlikely to be badly affected” by the shift in the insurance industry, but small and medium-sized miners as well as power companies “are likely to feel the pinch”.
“It is very much on our clients’ agenda”, the business paper quotes Harry Floyd, an insurance broker working with the mining industry, as saying. “Some are very concerned about it.” Another broker reported that he held “weekly meetings to discuss the implications of the insurers’ decisions”.
The articles in the Financial Times vindicate the Unfriend Coal campaign and give a boost to its efforts to end coal insurance. Editorial support from the world’s most influential business paper will accelerate the exit of responsible insurers from the coal sector, putting yet another nail in the coal coffin. The onus is now on lagging insurance companies such as Allianz, Generali, AIG and Munich Re to stop insuring coal projects as well.