Europe’s biggest insurers refuse to sell policies to coal miners and arms producers. A Dutch firm may go further by denying coverage to gambling companies and nuclear-power generators.
The asset-management arm of ASR Nederland NV already has a list of 243 companies that it won’t invest in for ethical reasons. Now the Utrecht, Netherlands-based firm is considering applying that list to the insurance side as well, according to Chief Executive Officer Jos Baeten.
“We are having an internal debate on whether we can still justify insuring those companies that are excluded from our investments based on our socially responsible investment policy,” Baeten said in an interview.
That would put ASR, the second-largest general insurer in the Netherlands, ahead of the pack.
AXA SA was the first big firm to stop insuring new coal-fired power plants back in 2017. By the end of 2018, Zurich Insurance Group AG, Munich Re, Swiss Re AG, Hannover Re and Allianz SE had all followed suit. These insurers also deny policies to producers of weapons banned by international agreements.
NN Group NV, ASR’s larger Dutch rival, has restricted investment in tobacco companies and firms involved in oil sands and “controversial pipelines” from its investments, in addition to thermal coal and banned weapons producers. These restrictions also apply to its insurance business, according to spokesman Maurice Piek.
ASR is now looking at broadening its exclusion list further to cover all armaments, gambling and nuclear power, a move that other firms could follow. Baeten said the ban would apply to new policies, and ASR will honor all of its existing contracts. The firm has already denied cover to several companies, he said, declining to identify them.
National issues could prevent some insurers from following ASR in refusing policies to nuclear power producers, for example, according to Charles Graham, an analyst with Bloomberg Intelligence.
“Denying cover to nuclear power is a tricky one,” he said. “For Allianz to do so given the position of the German state may be not impossible; for AXA, given the importance of nuclear power in France, it’s probably a lot less likely.”
Other firms prefer to continue doing business with such companies to retain the leverage needed to push them to change.
“It’s better to talk to the black sheep and try to engage with them,” said Chris Bonnet, head of environmental, social and governance business services at Allianz Global Corporate & Specialty. “We see such a high risk in coal, so it makes sense to exclude them. But in other sectors, it makes no sense to exclude.”
Providing insurance to a company that your asset-management arm has refused to invest in is an obvious source of tension for underwriters.
“We should not have one decision on underwriting and another on investment,” said Linda Freiner, global head of sustainability at Zurich. “The underwriting side is starting to wake up, but we are a little bit behind compared with the investment industry.”
Baeten’s position is straightforward.
“If you can’t explain yourself on the national news, you shouldn’t do it,” he said. “You should have the guts to make choices.”
Photo credit: Rifles are displayed at the Franklin Armory Inc. booth during the National Rifle Association (NRA) annual meeting of members in Indianapolis, Indiana, U.S., on Saturday, April 27, 2019. Photographer: Daniel Acker/Bloomberg
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