As insurers move away from the Adani coalmine, Dale Hansen (pictured), CEO of Austbrokers Coast 2 Coast, says while he understands public perception surrounding controversial projects, insuring coalmines can’t be overlooked.
“Insuring these types of controversial public projects in the current climate is a matter of prioritising pragmatism over politics, in my personal view,” he said.
“Public perception is most definitely starting to have a significant impact now and I do believe that this is going to increase in the coming years, at least until we find an equilibrium point again,” he continued, reflecting on the Adani insurance withdrawals.
He says insurers and clients are both impacted by political and socio-economic conditions, but insurers and reinsurers are at the greatest risk of being adversely impacted by negative public perception.
“It’s a problem for the clients, a problem for the insurers, a problem for reinsurers and it’s a problem in the broking space as well,” he said. “We also have a significant exposure to political risk here... It’s an everyday conversation for us now.”
Hansen argues that the increasing risk of negative public perception presents its own issue, as insurance protects these projects financially and secures funds for future investments.
“The future of insuring coalmines is something that I spend a lot of time thinking about,” he said. “Every business has to have their own set of morals, ethics and values and they need to stand on something, and most companies do have those. But I think it’s very important that we don’t judge other organisations by our own value sets – I think that’s when things get very complicated.”
Insurance withdrawal as a risk
Hansen believes a company’s stance on political issues is their own business and that organisations should not be punished for exercising their own discretion.
“It’s in their value piece, it’s not immoral, it’s not in any way an infringement on their integrity, it’s completely legal and the organisations who are involved in this sector, whether people like it or not, it’s still an important sector in the global economy,” he said.
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“They need to have their risk managed and mitigated and it’s very, very important that there is protection available for that sector because, whether you like it or not, from where I sit at the moment, the other sectors are not able to pick up the slack.”
As Hansen believes the global renewable energy sector is not yet ready to overtake the demand that is filled by coal at this stage, he says insurers withdrawing from coalmines puts the economy at risk.
“If you can’t insure it, you can’t buy it and you can’t have any credit or finance available,” he continued. “If we can’t get insurance for these sectors, then we’re not able to reinvest… clean coal and clean coal technology – that’s going to require significant investment. So, then it starts to become counter-productive and that’s very problematic.”