Chubb Becomes First U.S. Insurer to Restrict Business with Coal

Ross Hammond, Senior Strategist, Insure Our Future Campaign

Did you hear the news?

Chubb, the largest commercial insurer in the United States, just became the first U.S. insurer to adopt a coal policy. In its announcement Chubb spoke to the risks of climate change and the role that insurance companies must play in the low-carbon transition. Said Chubb’s Chairman & CEO Evan Greenberg,

“Making the transition to a low-carbon economy involves planning and action by policymakers, investors, businesses, and citizens alike. The policy we are implementing today reflects Chubb’s commitment to do our part as a steward of the Earth.”

Chubb’s policy says the company will stop insuring new risks for companies that generate more than 30% of revenues from thermal coal mining and will phase out existing coverage for these companies by 2022. It also commits Chubb to stop insuring new coal-fired plants by 2022, immediately end insurance of new risks for companies that generate more than 30% of their energy from coal, and phasing out existing coverage for these companies starting in 2022.

With this announcement Chubb joins a growing number of global insurers that have restricted or eliminated insurance coverage for, and investments in, fossil fuels. Since 2017, 15 insurers – 14 from Europe and one from Australia – have adopted restrictions on coal insurance. Just two weeks ago, Zurich became the third major global insurer to limit insurance coverage for the tar sands sector. Said Elana Sulakshana, Finance campaigner from Rainforest Action Network,

"It's been less than one year since the Insure Our Future campaign launched in the U.S. and we've already had this historic breakthrough. The pressure is just getting started and we expect to see a domino effect like we've seen in Europe."

As the biggest insurer in the U.S. power sector -- and one of the largest global property and casualty insurers in the world, with operations in over 50 countries -- Chubb’s announcement is sure to reverberate throughout the U.S. insurance industry. 

While most companies adopting coal exclusion policies explicitly cite climate change risks as driving their decisions, dumping fossil fuels is a smart business move as well. According to a new report from Moody’s Investor Service, insurers could “benefit from reduced exposure to potential environmental liability risks associated with thermal coal industries.” Moody’s expects more insurers to follow suit as scrutiny from the public and insurance regulators continues to increase. 

Why Chubb’s Announcement  Matters

Insurance is a crucial piece of the fossil fuel economy. Without insurance most of the 800+ coal plants currently in the pipeline can’t be built, and existing ones can’t operate as this simple explainer video from RAN makes clear. With a major U.S. insurance company joining the global movement against coal, the number of insurers excluding coal is approaching critical mass. Each additional policy, especially those from major energy sector insurers, makes insurance for coal companies and projects more expensive and difficult to secure. Restricting the availability of insurance also makes project approval and financing that much more difficult. 

This is a key step in the clean energy transition that is needed to tackle climate change. Chubb’s announcement was applauded by such luminaries as former UNFCCC Chair Christiana Figueres, Al Gore, and Michael Bloomberg who said, “it’s simply bad business to ignore the impact of the climate crisis… Chubb’s decision to end its coverage of coal companies is an example more organizations should follow.” The policy also received a great deal of press attention, including coverage in the Financial Times, NPR’s All Things Considered, Reuters, Huffington Post, and The Guardian.

The Devil is in the Details

While it is a step in the right direction, Chubb’s new policy contains several loopholes that the company needs to address:

  • Chubb can continue providing coverage for coal, particularly in regions where coal power is on the rise. The new policy allows Chubb to insure new coal plants until 2022 “in regions that do not have practical near-term alternative energy sources.” This means that Chubb could still insure new plants in Southeast Asia, where there are hundreds of proposed coal-fired power plants because of government policies that favor coal over renewables.

  • While Chubb’s new policy has a strong phaseout plan for coal mining companies, it does not rule out insuring new stand-alone coal mines, such as Australia’s Carmichael project, which 14 global insurers have already ruled out.

  • Though Chubb has pledged not to make any new investments in coal companies, it is not divesting existing holdings -- Chubb and its subsidiaries have at least $586 million invested in the coal sector according to the California Department of Insurance’s Climate Risk Carbon Initiative database (that value jumps up to $2.9 billion for all fossil fuel holdings).

  • Finally, unlike the policies of some of their European peers, Chubb does not address the highly carbon-intensive tar sands sector. 

Who’s Next?

Chubb has stepped up to lead the U.S. insurance industry in the right direction on climate. Its policy shows that insurers can be a critical part of the solution to the crisis we’re facing, but there is further to go. Members of the Insure Our Future campaign are mobilizing to push the other U.S. insurers to do even better than Chubb. Now is the moment for Chubb, Liberty Mutual, AIG, Berkshire Hathaway, and the rest of the U.S. insurance industry to step up and insure a clean future, and that means cutting all ties with the coal and tar sands sectors. 


Follow us on Twitter @Insure_Future and contact Ross Hammond at ross@sunriseproject.net for more information or to arrange a meeting with our team.