Reinsurance News

New Swiss Re climate policy targets shift away from oil & gas

17th March 2022 - Author: Matt Sheehan

Swiss Re has announced a new climate policy that includes commitments to shift away from the most carbon-intensive oil and gas production.

financial-climate-riskBy 2025, the reinsurer says 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, Swiss Re 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.

Swiss Re explained that its new oil and gas policy comes in response to new scientific findings published by the International Energy Agency (IEA).

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Accordingly, it will no longer re/insure or directly invest in new oil and gas field projects that will receive the go-ahead from their parent companies after 2022, with the exception of companies that have aligned with net-zero emissions targets.

“As most of the global expansion of oil and gas exploration and production is insured via company-wide property insurance policies, we have taken measures to align these portfolios (in both direct insurance and facultative reinsurance) with our commitment to net-zero emissions by 2050,” Swiss Re explained.

As a further commitment, from July 2022 Swiss Re will no longer re/insure or invest in companies and projects with more than 10% of their production located in the Arctic AMAP region, with the exception of Norwegian production.

The reinsurer is also developing an approach for oil and gas in treaty reinsurance, to be finalised by 2023.

Climate activists at Insure Our Future welcomed the new policy announcement, saying the move from the world’s second largest reinsurer will “bring new momentum” to the industry’s shift away from fossil fuels.

“Swiss Re is one of the world’s ultimate risk managers and the policy which it published today sends a strong message to fossil fuel companies, investors and governments: oil and gas operations need to be phased out in accordance with climate science or they may become uninsurable by the end of the decade,” said Peter Bosshard, Global Coordinator of Insure Our Future.

The announcement follows similar new oil and gas policies recently introduced by Hannover Re and MAPFRE, activists note, which together account for 11% of all global non-life reinsurance premiums.

“Now, the Insure Our Future campaign calls on Munich Re, Lloyd’s and SCOR, which together account for 26% of the global reinsurance market, to make commitments which build on Swiss Re’s approach by the time of their annual general meetings,” Bosshard added.

Lucie Pinson, Director of Reclaim Finance, also commented: “By taking steps to stop insuring new oil and gas projects and companies that won’t aim at aligning their activities with climate science by 2030, Swiss Re is headed in the right direction. The policy is not perfect yet and we encourage its peers to build on it to fully align with a realistic 1.5°C scenario.”

“As the IEA Net Zero Roadmap shows, this should mean drawing a red line against fossil fuel expansion and excluding both projects and companies that cross that line well before 2025”.

Back in 2019, Swiss Re made a public commitment to reach net-zero by 2050 across its whole business, and has since become a co-founding member of the UN-convened Net-Zero Insurance Alliance (NZIA).

Currently, cased on its Thermal Coal Policy introduced in mid-2018, Swiss Re does not provide re/insurance to businesses with more than 30% exposure to thermal coal utilities or mining, and it also has an exit strategy for thermal coal in its treaty business.

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