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European insurers are moving away from coal, despite the short-term losses

by

Frédérique De Simone

August 9, 2019 11:30

Photo : iStockPhoto

The insurance coverages for the energy producers that continue to use coal are becoming increasingly scarce. Insurers are less likely to cover this kind of industry.

By this measure, they undertake concrete actions to fight climate change and force the energy sector to adopt renewable energy, and this, despite the fact that “the insurers risk losing customers in the short term, while the long-term benefits could be considerable,” says the company GlobalData, specializing in the analysis of data.

European insurers lead the party

The insurer AXA delegates its policy to fight against climate change at its division of AXA XL, designed recently a result of the acquisition of the giant XL. Therefore, AXA XL will no longer provide any construction project related to coal and oil sands mining. This decision is expected to lead to a loss of income is temporary, mainly in 2020, 100 million euros, or nearly 112,16 millions of u.s. dollars, evaluates GlobalData.

This said, the perception of the public in respect of an insurance sector is likely to be improved through these actions, says the specialist of the analysis and the data.

“Move away from coal could have a significant negative impact on the insurance sector, given the loss of activity. However, in addition to possible progress and the perception of consumers, the sector could actually benefit from a financial advantage significant, long-term, because of the position anticharbon “, said Daniel Pearce, analyst insurance at GlobalData.

Other european insurers have also engaged the not. Chubb has recently announced that it will no longer provide insurance, or investment companies that operate coal-fired plants, or companies for which coal extraction generates more than 30 % of income.

According to the firm rating Moody’s, there has been no significant loss of business for the handful of providers which have taken such action.

On the contrary, “the removal of protections for producers of energy to fossil fuels that could allow the industry to benefit from reduced exposure to environmental risk,” added Mr Pearce.

Insurers have more to lose by encouraging polluters

Insurers are suffering from the natural disasters closely related to climate change, since they absorb a large part of the costs related to the damage caused by the wrath of mother-Nature. Climate change has an impact on the overall economy and the insurance sector is particularly at risk. In 2018, the annual report ofAon Weather, Climate & Disaster Insight were 394 natural disasters, resulting in the total loss of 225 billion u.s. dollars. All in all, private insurance plans and public have covered 90 billion u.s. dollars.

Canada lagging behind

In Canada, insurers remain discrete about the position taken drastic, as with the european insurers. They opt for responsible investments, to encourage the reduction of GHG emissions or the ecological footprint.

In Desjardins , for example, it is possible to invest in the green funds Societerra. Gold, 6 to 13 contain companies ayantdes interests in oil and gas companies as Altagaz, Enbridge , and only three of them, exclude firmly belonging in any way with the producers of black gold. The majority of the portfolio Societerra funds-excludes three sectors of investment : armaments, nuclear power and tobacco. The oil is not part of this list of excluded sectors.

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