First U.S. Insurer to Ditch Tar Sands
Elana Sulakshana, Energy Finance Campaigner, Rainforest Action Network
Slowly but surely, climate ambition is growing among the U.S. insurance industry. Last week, AXIS Capital became the second U.S. insurer to adopt a policy limiting fossil fuel insurance, following Chubb’s announcement in July. AXIS’ policy is the strongest one yet for a U.S. insurer, as it applies to both tar sands and coal. It also marks another first: AXIS is the only specialty insurer that has adopted a fossil fuel policy, setting a precedent for other companies that primarily provide insurance through the Lloyd’s Marketplace.
WHY INSURANCE MATTERS
Without insurance, energy companies would not be able to exploit new coal, oil, and gas deposits or operate existing infrastructure. These climate-killing corporations rely on insurers for everything from covering the costs of oil spills and gas explosions to legal fees when executives are sued (which is increasingly happening over climate liability). Insurers decide what risks are acceptable in our society, which gives them a uniquely important role to play in accelerating the low-carbon transition. As AXIS Capital CEO Albert Benchimol said in the company’s policy announcement:
“We believe insurers have an important role to play in mitigating climate risk and transitioning to a low-carbon economy.”
THE POLICY DETAILS
According to its new policy, AXIS will not provide insurance for new thermal coal or tar sands extraction and pipeline projects and their dedicated infrastructure. It will also end insurance for companies generating at least 30% of their revenues from thermal coal mining, producing at least 30% of their power from coal, or holding more than 20% of their reserves in tar sands.
This means that AXIS will not insure the Trans Mountain, Keystone XL, or Line 3 tar sands pipelines, or new tar sands mining projects. This is a big win for the climate and Indigenous rights. The tar sands sector is hugely carbon-intensive and spells disaster for Indigenous land rights, the local environment in Alberta where the majority of reserves are located, and waterways along pipeline routes. Kukpi7 Judy Wilson, Secretary-Treasurer of the Union of British Columbia Indian Chiefs and Chief of the Neskonlith Indian Band, called on other insurers to follow suit:
“First Nations have led resistance to the tar sands across North America, fighting project after project that have not obtained the Free, Prior, and Informed Consent of impacted First Nations. Other insurers should take note, as the companies that continue to cover tar sands will be targets for our movement.”
While AXIS has a strong restriction on tar sands, the policy still allows it to continue insuring the construction of new projects in “countries where sufficient access to alternative energy sources is not available” for the next five years. By postponing action until 2025, AXIS could provide coverage for hundreds of new coal-fired power plants, even though the science is clear that coal power cannot expand. To keep warming below 1.5ºC, United Nations Secretary-General Antonio Guterres recently called for a halt to the construction of any new coal power plants after 2020. The strength of the coal policy will depend on how this exemption is interpreted, and we’ll be monitoring AXIS closely on this point.
BY THE NUMBERS
AXIS Capital joins a global movement of insurers that are taking steps away from fossil fuels. With AXIS’ policy:
- 17 insurance companies have adopted policies restricting coal underwriting, and 20+ major insurers have adopted policies on coal investing.
- 4 insurance companies have adopted policies restricting tar sands underwriting, and 8 have policies on tar sands investing.
- 45% (that’s almost half!) of the non-life reinsurance market has adopted coal exit policies.
- 500+ GW of proposed coal-fired power may be exempt under AXIS’ policy, meaning that they need to close the loophole to really move away from expanding coal.
Following this announcement, all eyes are on U.S. insurers that are refusing to even acknowledge their role in the climate crisis, yet alone take action. Liberty Mutual is facing a new campaign we’ve just launched calling on them to stop insuring and investing in tar sands and coal. AIG is also coming under increasing pressure – as are the New Zealand All Blacks, the rugby team it sponsors – because it will not rule out the Adani Carmichael coal mine in Australia.
We are taking to the streets from Boston to London to Australia to hold these companies accountable, and we need your support. As a customer with a home or auto policy, you can tell your insurance provider to cut fossil fuels. Or, you can organize with your community to get your town or city to adopt a policy that favors buying insurance from companies like AXIS, as San Francisco and Paris have already done. If you are a prospective insurance employee, add your voice to this petition calling on your industry to take action, and feel free to reach out if you’re currently working at a company that’s part of the problem. Join us in demanding insurance companies stop making the climate crisis worse.