Chubb joins a growing stream of financial institutions who are scaling back their exposure to coal.
In a significant development, insurer Chubb Ltd disclosed, it has decided to cut its exposure to coal-powered plants operators and that it would not underwrite new risks for companies that generate more than 30% of their revenue from coal.
Insurance coverage for existing coal plants which exceeds this threshold limit be phased out by 2022, said Chubb. It went on to add, this will be applicable to utilities beginning from 2022.
Further, Chubb will not invest in companies that generate more than 30% of revenue from thermal coal mining or energy production from coal.
The development sees Chubb joining other financial institutions, including Allianz Group, Lloyds Banking Group and Hannover Re, in scaling back its exposure to coal.
According to a report by the Institute for Energy Economics and Financial Analysis, at least 34 coal divestment or restriction policies have been announced by financial institutions since the start of 2018.
Exceptions to the new policy will be considered until 2022, taking into account an insured company’s commitment to reduce coal dependence and also regions that do not have practical near term alternative energy sources, said Chubb.
The impact of adopting this new coal policy is expected to have minimal impact on premium revenue and no impact on investment performance, said Chubb.