AXIS Capital Restricts Fossil Fuels Underwriting
The Bermuda-based insurer AXIS Capital Holdings Limited announced on Oct. 16 that it will devote less capital to underwriting projects involving the mining or burning of fossil fuels.
In doing so, it becomes the latest in a growing number of insurers, including global giants Swiss Re, Munich Re, Chubb and AXA, to restrict their support of energy sources that scientists say are contributing to climate change.
Rising seas and increasingly intense storms in recent years due to global warming have gotten the attention of many insurers. It is becoming increasingly common for carriers to come out with statements and positions outlining how they plan to assist their risk partners in transitioning to a low-carbon economy.
In its October 16 release, AXIS outlined several new stances:
- That it will not provide new insurance or facultative reinsurance of new thermal coal plants or mines and their dedicated infrastructure; or oil sands extraction and pipeline projects and their dedicated infrastructure; or to companies that generate 30% or more of their revenues from thermal coal mining, generate 30% or more of their power from thermal coal or hold more than 20% of their reserves from oil sands.
- Renewals will be considered on a case-by-case basis until January 1, 2023. Exceptions to this policy may be considered on a limited basis until January 1, 2025 in countries where sufficient access to alternative energy sources is not available.
- In the area of investments, AXIS will not make new investments in companies that generate 30% or more of their revenues from thermal coal mining, that generate 30% or more of their power from thermal coal, or that hold 20% of their reserves in oil sands.
“We believe that insurers have an important role to play in mitigating climate risk and transitioning to a low-carbon economy,” said AXIS president and CEO Albert Benchimol, as quoted in the AXIS release.
“This policy is in line with our broader strategies such as reducing investments in lines that do not align with our long-term approach; investing in growth areas, such as renewable energy insurance, where we are a top-five global player; and growing our corporate citizenship program, a core focus of which is creating a positive environmental impact,” he added.
“We strive to ensure that every business decision we make is guided by our corporate values, and we believe this new thermal coal and oil sands policy is the right thing to do for our planet and our business,” added AXIS General Counsel Conrad Brooks.
As AXIS takes it stand, the Los Angeles Times reported this week on the decline in coal mining sector employment.
The October statement from AXIS follows the issuance of a fossil fuels policy by Zurich-based Chubb in July 2019. In that statement, Chubb announced:
- Chubb will not underwrite risks related to the construction and operation of new coal-fired plants. Exceptions to the policy will be considered until 2022 in regions that do not have practical near-term alternative energy sources and taking into account the insured’s commitment to reduce coal dependence.
- Chubb will not underwrite new risks for companies that generate more than 30% of their revenues from thermal coal mining. Chubb will phase out coverage of existing risks that exceed this threshold by 2022.
- Chubb will not underwrite new risks for companies that generate more than 30% of their energy production from coal. Chubb will phase out coverage of existing risks that exceed this threshold beginning in 2022, taking into account the viability of alternative energy resources in the impacted region.
“Chubb recognizes the reality of climate change and the substantial impact of human activity on our planet,” the company said in its July statement.
“Chubb expects a transition over time to a greater reliance on alternative and renewable fuel solutions to meet energy needs,” the company added. &