US President Donald Trump has repeatedly advocated the use of coal. An announcement that the President made about a new coal mine, which produces ‘clean coal’, has sparked outrage. Despite channelling waste CO2 for use elsewhere, the damaging effects of the mine are still felt. But is anything being done to reduce coal consumption by the insurance market?

AXA France became one of the first firms to deploy a coal divestment strategy in 2015 and have since led the way in green campaigning. Hannover Re has become the most recent reinsurer to divest some of its assets from coal investment, following other major insurers/reinsurers such as Swiss Re, Munich Re, SCOR, Lloyd’s, Generali, Allianz, Zurich and the Markel Corporation. According to the Unfriend Coal Network (UCN), a global network of Non-Profit Organisations and Social Movements, more than half of the world’s insurers/reinsurers have pledged to divest either some or all of their assets. Reportedly, around £15bn worth of assets have been divested already. UCN Coordinator, Peter Bosshard, said: “The world’s ultimate underwriters of risk clearly see no future for a fuel which is the biggest single source of carbon emissions.”

Although Hannover Re will adopt divestment policies, they have said they would still continue to reinsure coal plants as they do not wish to “act contrary to the decisions of sovereign nations” as a private company. There Is still a lot to be changed.

It is not just insurers/reinsurers taking these steps, the Church of England has gone further, pulling out of investing in companies that make more than 10% of their revenues from thermal coal or oil from tar sands.

The latest IPCC report outlines recent major climate disasters and how important it is to phase out coal if we are to meet the 1.5°C global warming temperature target. NASA reports a current average global surface temperature of 2°C. As a response, governments all around the world have pledged to reduce emissions to net zero by 2050.

As reported by Axco, “China is the world's largest coal producer... The government has prioritised a transition to cleaner energy sources and production over the intermediate term.” China plans investment of “CNY 2.5trn (USD 356.13bn) over the next three years”, going towards decommissioning coal plants. The country is already transitioning to become one of the largest producers of energy through renewable resources as a primary global manufacturer of solar panels and wind turbines.

Climate change is a major topic of global change across many industries, but as the IPCC clearly brings home, ‘we are nowhere near reaching the target.' A change will only be achievable if all industries come together and insurers/reinsurers will always play a key role in underwriting the risks - stop underwriting coal and perhaps coal mining will stop too.

The insurance industry is divesting from coal, but what other developments are taking place in the insurance industry that you need to be aware of? Stay up to date with changes around the globe with our non-life insurance market reports.