The Hartford Financial Services Group Inc., citing rising worries about climate change, is limiting its insurance coverage of companies in the fossil fuel business.
The insurer is halting coverage of companies that post 25% or more in revenue from thermal coal mining and more than 25% of energy production from coal. It also will not write policies or make investments in companies that generate more than 25% of revenue directly from extracting oil from tar sands.
And it will not write policies for, or invest in, the construction and operation of new coal-fired plants.
The Hartford, which posted about $19 billion in revenue in 2018, joins other insurance companies that are limiting or dropping coverage of energy companies that rely on fossil fuels. Chief Executive Officer Christopher Swift said the company is balancing the need for energy and economic growth with concerns about a warming planet and the role of fossil fuels.
“The world needs affordable, accessible energy to support global economic progress and at the same time action is needed to mitigate the impact such activity has on our climate,” he said. “Extreme weather affects people’s lives and businesses -- and the risks are getting worse. As an insurer and asset manager, we recognize the growing cost of this crisis, and we’re determined to use our resources and influence to address the challenge."
The Hartford made exceptions for business lines that cover employees, such as disability, life and other products offered by the insurer’s group benefits division that provides protection to customers.
The Hartford and several subsidiaries reported to the California Department of Insurance more than $3 billion in fossil fuel investments, including coal, in 2017.
Spokesman Leon Davis said The Hartford is “generally able” to get information related to a company’s 25% threshold through its work underwriting and investing in businesses. Asked why that level was selected, he said in an email that “after thoughtful analysis, we determined 25% is the right metric.”
The Rainforest Action Network, which is pressuring insurers to drop coverage of fossil fuel power plants, said The Hartford is the “first mainstream U.S. insurer” to restrict coverage for tar sands oil and coal.
“However, the policy contains some critical loopholes," the Rainforest Action Network said.
It urged The Hartford to rule out insurance for new tar sands pipelines and other tar sands transport projects because the insurer’s policy applies only to tar sands extraction companies. It also called on The Hartford to rule out insurance for new coal mines in addition to coal-fired power plants and restrict all companies helping to expand tar sands and coal.
“The current policy applies to companies that fall above a 25% threshold, but that does not address companies that are below that threshold at all,” the advocacy group said.
Betsy B. Monseu, chief executive officer of the American Coal Council, played down the actions of insurers because there’s little construction of power plants. But by backing out of writing new policies, insurers are depriving individual and business consumers of a “more diverse set of energy options,” she said.
“Those policies should be inclusive, rather than exclusive,” Monseu said.
The U.S. Oil and Gas Association did not respond to a message seeking comment.
One industry executive said action by insurers is having an impact. Andy Eidson, chief financial officer of Contura Energy Inc., a Tennessee coal supplier, told industry analysts on a conference call in November that a “general disposition of the insurance markets against the coal industry [is] making it tougher to find carriers.”
In July, Chubb Ltd. announced it will stop insuring coal-fired power plants. The Zurich, Switzerland-based insurer, which is the largest commercial insurer in the U.S., said it will no longer sell insurance to new coal-fired power plants or sell new policies to companies that get more than 30% of revenue from thermal coal mining.
The Rainforest Action Network said The Hartford joins 18 global insurers that have restricted or eliminated insurance coverage for, and investments in, coal.
Stephen Singer can be reached at [email protected].
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