Reinsurers meeting in Baden Baden, Germany to discuss annual reinsurance contract renewals have the power to make or break the climate transition, according to environmental group Insurer Our Future. The group has called on the assembled reinsurers to stop underwriting coal, oil and gas production and instead support a rapid transition to renewable energy.
Climate disasters caused an estimated US$280 billion in 2021 – the second-costliest year ever for the insurance industry – up from US$210 billion in 2020 and US$166 billion in 2019, according to Munich Re.
“Reinsurers play a foundational role in enabling the coal, oil and gas production that fuels climate disasters,” said Lindsay Keenan, European coordinator of Insure Our Future. “Without insurance, new fossil fuel projects would be impossible. Reinsurers must immediately rule out both facultative and treaty reinsurance for new coal, oil and gas and commit to phasing down existing cover in lime with climate science and pathways targeting 1.5C.”
Insure Our Future pointed out that Hannover Re, Swiss Re, Allianz and, most recently, Munich Re have adopted policies ruling out support for new oil and gas projects. The group called on other reinsurers to follow their lead. It singled out Berkshire Hathaway and Lloyd’s of London as two of the last major reinsurers still underwriting the expansion of the coal industry. The two insurers ranked last and second last, respectively, in Insure Our Future’s recent assessment of the industry’s fossil fuel policies.
“We have seen action to exclude fossil fuels by quite a few reinsurers now,” said Regine Richter of German Insure Our Future member group Urgewald. “Yet many of those assembled in Baden Baden have not taken such steps. Rather than discussing how to pass the rising costs of climate disasters on to their customers, they need to limit the damage by excluding fossil fuel clients.”
At peak production, EACOP is expected to generate an additional 34 million tons of CO2 per year, take farming land from 100,000 people, and risk oil spills into Lake Victoria, upon which more than 40 million people depend for water and food production. Twenty-four banks, 18 (re)insurers, and four export credit agencies have denied support to EACOP, and more than 100 of Marsh McLennan’s own employees have written to company leaders urging them not to support the project.
Insure Our Future has called on the reinsurers assembled in Baden Baden to rule out involvement in the project, and has urged Marsh McLennan CEO Daniel Glaser to heed his employees’ request.