Hannover Re has announced that it plans to adopt a more restrictive underwriting policy for the reinsurance of coal-based risks in order to help combat climate change.
As a general principle, the reinsurer will not provide coverage for any planned new coal-fired power plants or coal mines, and aims to no longer cover any coal-based risks in connection with power generation from 2038.
In June 2018, Hannover Re pledged to reduce its exposure to coal-fired power plants and coal mines over the long term, but until now had continued to underwrite coal-based risks.
The move will see Hannover Re join the ranks of 12 other major re/insurers that have restricted their underwriting for coal, including Allianz, AXA, Swiss Re, Munich Re, QBE, Generali and Zurich.
As part of its existing climate policy, Hannover Re does not invest in securities of issuers that generate 25% or more of their revenues from coal-based energy production.
On the underwriting side, the Group claimed that it has also supported the process of transformation in the energy industry through its efforts to write more risks associated with renewable or alternative energy sources.
Hannover Re believes that its expanded climate policy will help to support the goals set out by the Paris Agreement on climate change, which aims to limit the increase in global average temperature to below 2°C.
The governments of 195 nations reached agreement on a global action plan for a low-carbon economy, and 17 of 28 EU member states have either decided to phase out fossil fuels or are discussing such a move.
Hannover Re claimed that its goal to phase out reinsurance coverage for coal-based risks by 2038 makes allowance for the fact that a reduction in fossil fuel dependence can only take place over the medium to long term.
The reinsurer recently came under fire from a collective of prominent environmental organisations after refusing to rule out support from the controversial Carmichael coal mine in Queensland Australia.