The world’s biggest reinsurer Munich Re has cut back its coverage of oil and gas projects, as activists step up pressure on the industry to do more to tackle climate change.
The German reinsurance group said on Thursday that from April next year, it would no longer invest in or insure the planning, financing, construction or operation of new oil and gasfields, new oil-fired power plants or developments in “midstream” oil infrastructure like storage and transport.
But it did not rule out offering coverage for new gas pipelines, liquefied natural gas plants and gas-fired power plants.
Its listed equities and corporate bond portfolio will also cease new direct investments in companies where oil and gas is the main activity.
The group’s Lloyd’s of London syndicate, an insurance underwriter for areas including offshore energy, said last week it would stop underwriting a wider range of oil and gas contracts from January. It already excludes activities such as Arctic drilling.
Insurers and reinsurers Swiss Re, Hannover Re, Scor, Axa XL, Mapfre, Italy’s Generali and Fidelis have all introduced restrictions on reinsuring oil, and in some cases gas, since June last year.
Following Munich Re’s decision, 43 per cent of the global reinsurance market by premiums has restricted cover for oil, according to analysis of industry data by campaign group Insure our Future. Munich Re’s global premium share is 13 per cent.
Reinsurers provide coverage for primary insurers and have been grappling with the fallout from increasingly frequent extreme weather events such as Hurricane Ian, which caused widespread destruction across Cuba and the southeastern US last week.
Munich Re estimates insurers covered $120bn of the $280bn in global losses from natural disasters in 2021, and has flagged growing demand for catastrophe insurance in Europe. It has previously committed to reducing carbon emissions associated with its oil and gas coverage by 5 per cent relative to 2019 by 2025.
Environmental activists have turned their attention to the reinsurers, insurers and insurance brokers who provide cover for new fossil fuel projects, because generally they cannot find financing if they are not insured.
European co-ordinator at Insure our Future Lindsay Keenan said Munich Re’s decision sent a message to the insurance industry and energy companies that they could struggle to find cover if they do not “align their business with climate science and the 1.5c climate target”.