Fidelis has said that it is to extend its underwriting guidelines as part of its commitment to sustainability.
The firm said that its new guidelines will cover both environmental and social topics under four ‘umbrella’ guidelines covering Environmental, Human and Labour Rights, Animal Welfare, and Rule of Law, in addition to six industry-specific guidelines on Defence and Armaments, Forestry & Agriculture, Mining, Coal, Oil and Gas, and Nuclear. The company said this was a continuation of its Forced Labour clause to marine cargo business, which it began to apply in 2020.
The company said it had also stopped providing direct insurance for thermal coal plants, projects and infrastructure in 2020, but with the latest guidelines the restrictions around fossil fuels have been expanded. This reflects the key role insurance must play in supporting the transition towards a low-carbon economy and is in line with Fidelis’ recently made pledges as a member of the Net-Zero Insurance Alliance (NZIA).
Richard Brindle, chairman and group chief executive officer of Fidelis, said: “The insurance industry has a hugely important role to play in holding companies to account and making change happen – but nothing changes unless we are prepared to walk away from activities that are harmful to the environment, people, society, and animals.”
He added: “We don’t see enough of this yet, but we hope that insurers – and brokers – will increasingly engage with their clients to ensure that the insurance industry is not supporting damaging business practices.”
Under the auspices of the new guidelines, Fidelis said it will continue to not directly insure thermal coal mines; power plants; infrastructure; tar sands extraction; fracking operations, including for shale oil and natural gas; and Arctic oil and gas exploration and drilling, with ‘Arctic’ being defined under the Arctic Monitoring and Assessment Programme. It also said that it will not insure any company that has revenues of over 20% from any of these ventures.
However, it said it would only insure metallurgical coal if there were clear commitments and a timeline for achieving net zero emissions, in line with the Paris Agreement goals.
It said that it will investigate before supporting greenfield exploration and drilling and will only do so subject to environmental impact considerations and where there is a strong economic rationale. It also said that from the beginning of 2024, oil and gas companies will need to have clear commitments and a timeline to reach net zero, again in line with the Paris Agreement.
According to Fidelis, the new guidelines will initially apply to insurance business, with an approach being explored for treaty reinsurance. Fidelis will further refine its approach in 2023 in line with the NZIA commitments, which require the setting of intermediate decarbonisation targets within six months of the publication of the NZIA target-setting protocol (expected in January 2023).
The company said it already has restrictions in place on fossil fuels within its investment portfolio, with an exclusion on coal as well also oil and gas (unless below 25% of revenues).
