Chubb Ltd. is becoming the first U.S. insurance company to refuse coverage or investment dollars to companies that draw more than 30% of their revenue from coal mining or coal-fired generation.
The company will phase out its underwriting for existing coal plants by 2022, and for coal utilities beginning in that year. Until then, it’ll consider exceptions for companies that commit to reducing their dependence on coal, or regions with no “practical” near-term alternatives, Reuters reports.
“Making this transition necessarily involves planning and action by businesses, policy-makers, investors, and citizens,” Chubb said in a prepared statement. The company predicted the policy change would have only a minimal impact on its premium revenue, and no impact on investment performance, Reuters states.
Data from the California Department of Insurance’s Climate Risk Carbon Initiative show the company currently investing about US$2.9 billion in fossil companies.
“A major U.S. insurer like Chubb restricting insurance for coal projects and companies is a game-changer,” said Insure Our Future Senior Strategist Ross Hammond, though he added the company should also stop insuring new coal mines.
“Chubb’s move follows similar decisions by some of Europe’s biggest insurers and financial institutions—including Allianz Finance Corporation, AXA, Lloyds Banking Group, and Zurich Insurance Group AG—which have placed restrictions on coal underwriting as part of an effort to combat climate change,” Reuters notes. The announcement “comes amid growing pressure by activist investors and environmentalists for U.S. insurers and banks to pull back from polluting industries like coal and oil sands production.”
The Institute for Energy Economics and Financial Analysis (IEEFA) says at least 34 financial institutions have announced new coal divestments or restrictions since the beginning of 2018.