U.S. insurer to restrict tar sands insurance
October 16, 2019
AXIS Capital’s new policy increases pressure on Liberty Mutual, AIG to follow suit
UNCEDED COAST SALISH TERRITORY (VANCOUVER, BC) — Today, U.S. insurer AXIS Capital (NYSE: AXS) announced a new policy on fossil fuels to accelerate the transition to a low-carbon economy. In an unprecedented step for a U.S. insurer, AXIS Capital will restrict insurance for tar sands projects and companies, in addition to coal.
AXIS had previously covered the risks of the existing Trans Mountain Pipeline, according to documents from 2014, and could still be involved in the project through the Lloyd’s marketplace. However, this policy clearly rules out insuring the risks of the pipeline expansion.
“The insurance industry worldwide is rapidly coming to terms with the existential threat climate change poses to its business model,” said Sven Biggs, Climate and Energy Campaigner at Stand.earth. “ We applaud AXIS’ commitment to phase out policies not just for new tar sands projects but also for companies. Other insurance companies like Zurich must follow in AXIS’ footsteps and explicitly commit to not insure tar sands projects like the Trans Mountain Pipeline expansion. If the expansion goes forward, there is no way for Canada to meet its climate commitments under the Paris Agreement, which would critically undermine the continued viability of the insurance industry.”
“With this announcement, AXIS Capital recognizes that insuring the Trans Mountain tar sands pipeline expansion is the epitome of risk: for Indigenous land rights, our water, and the climate. First Nations have led resistance to the tar sands across North America, fighting project after project that have not obtained the Free, Prior, and Informed Consent of impacted First Nations. Other insurers should take note, as the companies that continue to cover tar sands will be targets for our movement,” said Kukpi7 Judy Wilson, Secretary-Treasurer of the Union of British Columbia Indian Chiefs and Chief of the Neskonlith Indian Band.
AXIS Capital is an insurer and reinsurer that is active in the energy sector. It is registered in Bermuda but the majority of employees, including senior management, and business operations are in the U.S. According to the new policy, AXIS will not provide insurance or facultative reinsurance for new thermal coal or tar sands extraction and pipeline projects and their dedicated infrastructure. It will also end coverage for companies generating at least 30% of their revenues from thermal coal mining, producing at least 30% of their power from coal, or holding more than 20% of their reserves in tar sands. However, the insurer provides an overly long transition period, as renewals for contracts with existing clients will be considered on a case-by-case basis until January 1, 2023, as well as exemptions for “countries where sufficient access to alternative energy sources is not available” through 2024.
“We welcome AXIS Capital’s new policy as a major win for our climate and for Indigenous rights. Without insurance, destructive energy projects cannot be built, and AXIS joins a growing movement of insurers taking action to keep fossil fuels in the ground,” said Elana Sulakshana, Energy Finance Campaigner at Rainforest Action Network. “While AXIS’ policy is a strong first step, it must eliminate the geographic exemptions and stop insuring new projects everywhere today. The pressure is mounting on Liberty Mutual and AIG to take action and improve upon AXIS’ policy.”
In August 2019, Stand.earth joined a global coalition of 32 environmental, Indigenous, and citizen groups in calling on the companies listed on the insurance certificate for the existing Trans Mountain Pipeline to drop their policies ahead of the August 31 renewal deadline. Citing massive political and environmental risks from one of the most contentious projects in Canada’s history — the expansion of the oil sands pipeline from Alberta to British Columbia — the letter also asks the companies, as well as companies considering insuring the pipeline expansion, to not insure any future oil sands projects.
Only 12 companies out of 27 responded to the letter. Zurich, the largest insurance company in Switzerland, recently announced a policy to restrict insurance for, and divest from, the oil sands industry. The company, which is listed on the certificate as the primary liability insurer, said it would continue to insure the existing Trans Mountain Pipeline while having discussions with the Canadian government on whether the existing pipeline would allow Canada to meet its climate commitments under the Paris Agreement. Zurich did not comment specifically on the expansion of the Trans Mountain Pipeline.
Over the past year, Insure Our Future has been pressuring U.S. insurers, including AXIS, to stop insuring and investing in coal and tar sands projects and companies. Since the launch of the Unfriend Coal campaign two years ago, of which Insure Our Future is the U.S. branch, 17 insurers have adopted policies restricting coal insurance and four insurers have adopted policies on tar sands insurance. The shift away from coal and tar sands is accelerating, with more than half of these policies adopted in 2019. In July, Chubb became the first U.S. insurer to restrict involvement in coal. Today’s announcement marks another global first: AXIS Capital is the first specialty insurer to adopt a policy on any fossil fuel, which demonstrates that other specialty insurers can and should take action to stop insuring coal and tar sands as well.
Media contact: Sven Biggs, Climate & Energy Campaigner, email@example.com, 778-882-8354