“Will China follow leading global insurers and withdraw from coal power?”, 17 December 2019

There is an encouraging trend in the insurance industry of leading companies shifting away from coal power. Seventeen major insurers have ended or limited insurance services for coal projects and at least 35 insurance companies have divested from coal since 2017, according to the latest report from the Unfriend Coal network, which advocates an active role for financial institutions in the low-carbon transition.

… If we are to avoid climate breakdown then China’s support for renewables over coal will be essential because it is one of the world’s leading investors, financiers and insurers of energy projects.

Companies that have taken action to withdraw from coal currently make up 46% of the non-life reinsurance market and include the world’s largest insurance and reinsurance companies…

In Europe, all major international insurers other than Lloyd’s have ended or limited insuring coal projects…

The changes are having important effects on the coal industry… With less insurance available for coal companies, premiums are increasing. Meanwhile, renewables developers are benefiting from an influx of insurance capital that is lowering premiums.

About 80% of coal power under construction or in planning is located in Asia. If this is completed, global society has no chance of reaching the goals of the Paris Agreement, to which the region’s governments have committed. Insurers from China, Japan, Korea and other Asian countries have a critical role to play in supporting Asia’s transition to a low-carbon society…

The guidelines for establishing the green financial system, approved by the State Council in 2016, “encourage and support insurance institutions to innovate green insurance products and services”… However, unlike banks, Chinese insurers do not have to follow green standards.

China is a leading financier and insurer of both renewable and non-renewable power projects. According to Finaccord, an insurance market research company, the world’s top 10 coal insurers include the Chinese carriers PICC, CPIC, Ping An and Alltrust. Among those, Ping An is the only one to have joined the UN Principles for Responsible Investment. Ping An also appears to be the only Chinese insurer so far to issue a coal phase out policy…

Chinese insurers taking a business-as-usual approach to coal risk undermining the climate action taken by other insurers…

Chinese and international observers claim that Sinosure does not have adequate systems in place to manage these risks. This may create a situation in which Sinosure is left with a global portfolio of “stranded assets” whilst contributing to unmanageable climate breakdown.

While they consider next steps, Chinese insurers could as a minimum strengthen their risk assessment of coal projects and avoid expanding their presence in the coal sector by filling the gaps left by other insurers.

[Also referred to AXA, Allianz, Zurich, Willis Towers Watson]