US insurance giant Travelers has announced it will not underwrite new coal-fired power plants, but campaigners said the policy needs to go further.
Travelers announced the new policy yesterday and part of the commitment is also to refuse to underwrite new policies for or make new investments in companies that generate more than 30% of their revenue or energy production from coal or have more than 30% of their reserves in tar sands. It will phase out existing relationships that exceed these thresholds by 2030.
In its statement the underwriter highlights exceptions to the new rules.
“Travelers will continue to support the needs of communities with insurance and surety products that serve to protect families and the environment,” it said. “For this reason, this policy is not applicable, for example, to reclamation bonds, a type of bond that ensures land disturbed by mining operations is restored to its original state.
“With respect to our Lloyd’s business, we will follow Lloyd’s commitment to sustainable insurance, as outlined in its 2020 Environmental, Social and Governance Report, which sets “targets for responsible underwriting and investment to help accelerate society’s transition from fossil fuel dependency, towards renewable energy sources.”
“Adopting a coal and tar sand exclusion policy is a notable first step from Travelers. The insurance industry is being forced to wake up to the threat posed by climate change, and to its role and responsibilities. There is real momentum now for insurance companies in the U.S. to align their policies with climate science and end support for new fossil fuels,” said Connecticut Citizen Action Group Executive Director Tom Swan.
Insure Our Future added Travelers was one of the last major insurance companies left in the world without any restrictions on coal underwriting. It now joins a growing list of at least 35 insurers globally that have ended or limited their coverage for coal projects, including all major European and most Asian insurers. It is the third North American insurer and 14th overall to restrict insurance for the tar sands oil sector.
“Travelers’ decision to rule out tar sands insurance is a further indication that insurance companies are increasingly recognizing the high-risk profile and significant reputational risks that come with insuring this outdated, dangerous and highly polluting industry. Tar sands have had devastating impacts on our drinking water, air, Indigenous rights, and our shared climate. The door closing on tar sands would be a major win for impacted communities like mine,” said Melina Laboucan-Massimo, Lubicon Cree from the Alberta tar sands and Just Transition Director, Indigenous Climate Action.
Campaigners said Travelers’ announcement will increase the pressure on AIG and Berkshire Hathaway to rule out coal, as they are the two remaining major US insurers with no restrictions on underwriting coal; as well as on Chubb and Liberty Mutual to include tar sands in the scope of their fossil fuel restrictions.
“Travelers’ announcement further isolates AIG as one of the last insurers willing to provide coverage for coal and tar sands. AIG’s CEO Peter Zaffino has yet to take the steps needed to restrict the company’s coverage for and investments in the industries destroying our planet. AIG needs to get with the climate program and stop insuring coal, tar sands, and all fossil fuel projects,” said Hannah Saggau, insurance campaigner with Public Citizen.
However, climate group director Samantha Dynowski, said Travelers could and should have gone further.
“While we welcome Travelers’ updated climate commitments, the policy has significant loopholes and falls well below the standard set by leading European insurers,” she said. “Travelers does not rule out support for all companies that are developing new coal and tar sands projects that the climate cannot afford. Furthermore, it leaves the door open for the insurer to renew existing coal and tar sands insurance contracts until 2030. The time to act is now, not in eight years.”
She added the policy also fails to address Travelers’ ongoing insurance and investments in conventional oil and gas expansion.
Campaigners said it remains one of the top three insurers of oil and gas companies worldwide and has not yet ruled out insuring oil and gas drilling in the Arctic National Wildlife Refuge.