MAJOR INSURER RESPONDS TO CLIMATE CHANGE
On July 1, 2019, Zurich based Chubb Limited (NYSE: CB), the self-described "world's largest publicly traded property and casualty insurance company," announced that it has adopted a new policy concerning coal-related underwriting and investment. With the new policy, the company will no longer underwrite the construction and operation of new coal-fired plants or new risks for companies that generate more than 30% of their revenues from coal mining or energy production from coal. Insurance coverage for existing coal-plant risks that exceed this threshold will be phased out by 2022, and for utilities beginning in 2022. In addition, Chubb will not make new debt or equity investments in companies that generate more than 30% of revenues from thermal coal mining or energy production from coal.
Quoted in a press release, Evan G. Greenberg, Chairman and CEO of Chubb said that the company recognizes the risks of climate change and "the impact of human activity on our planet" and that "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," he commented.
Because Chubb is the self-described "leading crop insurer in the U.S. with a $2.3 billion agriculture insurance business and an agribusiness serving the commercial P&C needs of farmers and ranchers," the company is clearly facing an extraordinary amount of loss claims from farmers and ranchers besieged by the record breaking floods of 2019.
Chubb's 2018 Annual Report disclosed that the company views Climate Change as an existential threat. The Chairman's remarks reveal that while last year's disasters were of less magnitude than the record–setting levels of 2017, it nonetheless was a major year for Natural Catastrophe claims, with insured losses around $80 billion, possibly the fourth highest in 50 years.
"Chubb's decision to implement this new coal policy clearly reflects the company's perception that phasing out coal production and usage is in their long term self interest, which now seems to be aligned with that of the planet," commented Dana Johnston, President of the grass-roots environmental nonprofit, Mainstream Green. "I am delighted that Chubb has taken this meaningful step. Hopefully other companies will follow suit, without delay. We have precious little time to reverse this path to planet disaster!"
Chubb's CEO, Mr. Greenberg, also expressed the opinion that "government social policies ...insulate people and society from the true costs of their decisions." He makes the point that when people choose to live in more urban than rural areas, or near water or wilderness, they put themselves at greater risk of loss to natural catastrophes. The company plans to make sure that insurance premiums increase commensurately with the risks to be covered. "We must face the reality that there is a greater cost citizens must bear to remain protected. Insurers don’t have a printing press," he wrote.
To view the policy and other information about Chubb's commitment to the environment, click here.