Korean Re has announced that it will no longer provide reinsurance for new coal mining or power plant construction from the beginning of next year.
The move was cautiously welcomed by Insure our Future, which said that new restriction were weaker than those of Korean Re’s international peers. It said that Korean Re’s current policy also allows exceptions based on national energy policies or demand in developing nations, despite the global need to phase out coal to meet 1.5°C.
Peter Bosshard, a coordinator at Insure Our Future, said: “While we welcome this move from Korean Re, its new coal restrictions are weaker than the policies of all its international peers. They do not address reinsurance treaties for ongoing coal operations and even allow continued support for many new coal projects.”
He added: “The policy also ignores the need to end support for new oil and gas projects. Korean Re should strengthen its fossil fuel policy so it reflects climate science and the best practices of the industry.”
Korean Re posted an update on its website, called ‘Declaration on the Phase-out of Coal Financing’.
That update reads: “Korean Re will cease to invest in or provide individual reinsurance covers for new coal mining or coal-fired power plant construction with effect from January 1st, 2023. Exceptions may be allowed under limited circumstances with respect to national energy policies or social needs such as support for the socially disadvantaged and underdeveloped countries. This is based on the recognition that a co-existence period is inevitable in order for a country like Korea, which has relied on traditional carbon-intensive industries for economic growth, to transition to a low-carbon economy. Nevertheless, Korean Re will make our best efforts to achieve net-zero by 2050.”
This latest move follows similar declarations from major reinsurers around providing coverage for fossil fuel-related activities.
Earlier this year, Swiss Re said it was implementing a new climate policy to shift away from the most carbon-intensive oil and gas production.
By 2025, the reinsurer said that half of its overall oil and gas premiums are to come from companies that are aligned with net zero by 2050, and by 2030 its portfolios will only contain these companies.
Last year, it stopped providing individual insurance covers for those oil and gas companies that are responsible for the world’s 5% most carbon-intensive oil and gas production.
And from July 2023, it will up this target to no longer provide covers for companies responsible for the 10% most carbon-intensive production.
And in October last year, that firm and Munich Re said they were ruling out support for a controversial mutual fund proposed for the Australian coal industry due to their climate and coal policies would rule out their involvement in the scheme.
The coal industry mutual fund has been touted as a potential solution to the insurance challenges faced by the Australian coal industry, after insurers increasingly refuse coverage because of concerns about global warming and climate risk.
Despite that, Reinsurance News reported in July that insurers in the US and Canada had nearly $60bn invested in fossil fuels.
Using data from 2019, released in April 2022 by the California Department of Insurance, analysis published by Insure Our Future found that, as of 2019, ten insurance companies were heavily invested in fossil fuels.
The list included top insurers like American International Group (AIG), Berkshire Hathaway, Travelers, Chubb, The Hartford, and Liberty Mutual.
According to the findings, in 2019 AIG and Berkshire Hathaway had the largest investments in oil and gas, at $20.66m and $5.9m, respectively.
AIG’s fossil fuel investments made up 11.4% of its assets under management for the subsidiaries analysed.
According to Insure Our Future, several insurance companies that were analysed have adopted restrictions on their support for specific sectors including coal, tar sands, and Arctic oil and gas since 2019.
At the same time, the collected data showed that North American companies have not adopted similar policies, therefore, it is unlikely that they have dramatically reduced their exposure to oil and gas since the data was collected.
