Zurich Insurance stops coverage of new fossil fuel projects
Zurich Insurance stops coverage of new fossil fuel projects | Insurance Business New Zealand
Environmental
Zurich Insurance stops coverage of new fossil fuel projects
Environmental campaign welcomes action, urges for more oil and gas exits
Environmental
By
Kenneth Araullo
Zurich Insurance has announced a significant policy change by declaring it will no longer provide new insurance underwriting for oil and gas projects.
This decision aligns with the company’s intensified measures against clients aiming to expand their involvement in metallurgical coal mining.
According to Bloomberg, the firm intends to mandate its highest-emitting corporate clients to implement strategies for reducing their carbon emissions, details of which are expected to be elaborated in Zurich’s forthcoming climate-transition plan later this year.
Sierra Signorelli, Zurich’s chief executive of commercial insurance, articulated the rationale behind this strategic shift, emphasising the misalignment of further fossil fuel development with the insurer’s aspirations for net-zero emissions by 2050.
“Further exploration and development of fossil fuels isn’t required for the transition,” Signorelli said. “We think it’s the right time to evolve our position.”
This policy adjustment marks a pivotal change for Zurich, which has historically insured a wide array of fossil fuel infrastructure. Despite generating approximately US$2.1 billion in premiums from such clients in the previous year, which accounts for 7% of the company’s total commercial premiums, Zurich anticipates that the new policy focused on ceasing underwriting for new fossil fuel projects will not significantly impact its financial performance.
The insurance sector has faced challenges in addressing climate change impacts. Zurich, in particular, withdrew from the Net Zero Insurance Alliance last year amid criticisms, with CEO Mario Greco later denouncing such climate coalitions as “political and bureaucratic” and advocating for companies to independently represent their environmental stances.
Praise from Insure Our Future
Despite its prior investments in new oil and gas projects drawing criticism and affecting its ranking in the Insure Our Future campaign’s annual scorecard of insurers’ fossil-fuel policies, Zurich’s latest move has been lauded as a significant step towards aligning more closely with European competitors in terms of environmental responsibility.
As part of its enhanced environmental commitments, Zurich aims to engage with 65 of its corporate clients with the highest insurance-related emissions this year, expanding to 450 of its largest clients by 2030.
The insurer is also demanding that all oil and gas clients establish interim emissions reduction targets and articulate a credible strategy for achieving net-zero emissions by 2050. Signorelli warned that failure to demonstrate tangible progress towards these goals could lead to the consideration of terminating customer relationships.
Zurich also plans to increase its insurance coverage for emerging clean-energy infrastructures, such as carbon capture and hydrogen power technologies, despite acknowledging the associated risks.
This initiative has been welcomed by environmental advocacy groups, including the Insure Our Future campaign and Swiss nonprofit Campax, which have urged other major insurers to follow Zurich’s lead.
“It is encouraging that with Zurich, all big European insurers have now stopped underwriting new oil and gas extraction projects. AIG, Tokio Marine and big Lloyd’s insurers like Hiscox now need to move next. All insurers also must stop underwriting the new LNG terminals, pipelines and gas power plants which lock in increased fossil fuel demand for decades to come,” Insure Our Future coordinator Peter Bosshard said.
The announcement arrives just days before Zurich’s annual general meeting (AGM) on April 10, where environmental activists had scheduled demonstrations to challenge the company’s environmental policies.
According to the Insure Our Future campaign, 18 insurers, representing a significant portion of the market, have now implemented restrictions on oil and gas, while 47 insurers have committed to exiting coal.
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