US insurer Chubb has stopped providing services to the coal industry, saying the sector is a significant contributor to climate change.
Following escalating pressure from environmental advocacy groups, Chubb announced that it would cut its exposure in the sector by discontinuing its investment and insurance policies within three years. The insurer will rule out selling new coverages to companies constructing or operating coal power plants with the likes of the German energy giant RWE. It will also ban offering insurance policies to firms generating more than 30% of their revenue from mining coal or generating or supplying coal-powered electricity.
With this move, Chubb became the first major US insurance company to terminate its coverage for coal companies.
After some deliberation, the company has recognized the reality of climate change and its massive impact on our planet, Evan Greenberg, Chubb chief executive said.
Joseph Wayland, the insurer’s general counsel, said that the company’s business interests and environmental concerns drove the decision.
Wayland echoed the company’s concern about climate change, saying that it is impacting its business from increasing fire risk to flooding. He also noted that the environmental phenomenon has a crucial role in the increasing intensity and frequency of natural catastrophes.
In the last two years, a series of substantial natural catastrophes claims hit insurance firms. Insurance giant Swiss Re estimated that the industry faced $76 billion of losses from natural catastrophes alone in 2018. While not all disasters can be directly attributed to climate change, data specialists say that warmer temperatures more likely caused some of them, like the California wildfires in 2018.
Market experts believe Chubb’s decision could increase the pressure on other leading U.S. insurers such as AIG and Travelers to follow suit.
The insurer’s anti-coal move is the latest in a growing number of divestments of major financial players from companies that are linked to climate change.
