Zurich Insurance Group AG is pledging further cutbacks in its underwriting of oil and thermal coal.
The company will stop underwriting new greenfield oil exploration projects "in the absence of meaningful transition plans," the company's commercial insurance CEO, Sierra Signorelli, said during a Nov. 18 investor day presentation. The insurer further promised to phase thermal coal out of its underwriting by 2030 for OECD and European Union countries and by 2040 for the rest of the world, with some exceptions for companies that have "formally approved science-based targets in place." Zurich will also underwrite any oil and gas drilling and production in the Arctic.
Signorelli said the company would replicate the engagement approach it has taken with thermal coal clients for its oil and gas clients. Zurich said in 2017 it would engage clients and investee companies with more than 30% exposure to thermal coal, oil sands and oil shales in a two-year dialogue. In 2019, Zurich announced it would longer insure companies that generated more than 30% of their revenue from mining thermal coal or extracting oil from oil sands.
"We will engage with our oil and gas customers over the next 24 months to understand and support their transition plans," Signorelli said.
Of the 270 clients that fall under Zurich's 2017 policy on coal, oil sands and oil shale, the company had now stopped insuring or has divested from 41% as of June 2021, according to the presentation. Signorelli said 39% of clients had fallen below the 30% threshold due to their dialogue with those companies, and another 20% have good transition plans in place.
Fossil fuels accounted for 4% of Zurich's total bound premium at year-end 2020, according to the presentation.
Insure Our Future, a campaign group pressuring insurers to stop covering fossil fuels, said Zurich's new moves constituted a "minor step" back from fossil fuels. The group in a press release said Zurich's greenfield oil policy allows the company to maintain "business as usual" when it comes to oil and gas expansion.