AXIS becomes first U.S. insurer to restrict coal and tar sands
AXIS Capital will restrict insurance for both coal and tar sands projects and companies, becoming the first U.S. insurer to do so.
Yesterday, October 16, insurer and reinsurer AXIS Capital announced a new policy on fossil fuels in an effort to help expedite the transition to a low-carbon economy.
Breaking norms, AXIS Capital will restrict insurance for both coal and tar sands projects and companies, becoming the first U.S. insurer to do so.
According to the new policy, AXIS will not provide insurance or facultative reinsurance for new thermal coal or tar sands extraction and pipeline projects and their dedicated infrastructure. It will also end coverage 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.
However, the policy includes exemptions for “countries where sufficient access to alternative energy sources is not available” over the next five years. This could allow AXIS to cover the majority of the over 800 coal-fired power plants currently proposed globally, effectively postponing action until 2025.
Pressure on the insurance industry to drive change
In July, Chubb became the first U.S. insurer to restrict involvement in coal. AXIS Capital’s announcement makes the company the first U.S. insurer to adopt a policy on fossil fuel.
The insurance industry has been a target by different climate change and environmental groups campaigning to drive policy change. One more active group, Insure Our Future, has been pressuring U.S. insurers to stop insuring and investing in coal and tar sands projects and companies over the last year. The group is part of the Unfriend Coal campaign that launched two years ago.
Since its creation, 17 insurers have adopted policies restricting coal insurance and four insurers have adopted policies on tar sands insurance.
Policy change praised by outside groups
The policy change has already received praise from environmental groups, including the Rainforest Action Network.
“We welcome AXIS Capital’s new policy as a major win for our climate and for Indigenous rights. Without insurance, destructive energy projects cannot be built, and AXIS joins a growing movement of insurers taking action to keep fossil fuels in the ground,” Elana Sulakshana, energy finance campaigner at Rainforest Action Network said in a statement.
Acknowledging the recent climate protests against Liberty Mutal, Sulakshana adds, “AXIS has raised the bar for U.S. insurers by restricting both coal and tar sands insurance. The ball is now in Liberty Mutual and AIG’s court to take responsibility for their role in the climate crisis.”
“With this announcement, AXIS Capital recognizes that insuring the Trans Mountain tar sands pipeline expansion is the epitome of risk — for Indigenous land rights, our water, and the climate,” Kukpi Judy Wilson, secretary-treasurer of the Union of British Columbia Indian Chiefs and chief of the Neskonlith Indian Band said in a statement. “Other insurers should take note, as the companies that continue to cover tar sands will be targets for our movement.”
The policy change comes weeks after the Global Climate March and amongst major climate change protests happening throughout the U.S. and abroad.
“Youth are rising up around the globe, calling on governments and corporations to tackle the climate emergency. We are at a point of utmost urgency,” Brett Fleishman, head of finance campaigns at 350.org said, adding, “While AXIS’ policy is a good step, it must eliminate the geographic loophole in its policy and stop insuring new coal projects everywhere today, especially in Southeast Asia where there are hundreds of proposed power plants. We call on insurers around the globe to step up and improve upon AXIS’ policy,”
AXIS Capital is an insurer and reinsurer that is active in the energy sector. It is registered in Bermuda but the majority of employees, including senior management, and business operations are in the U.S.
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