Swiss Re and Munich Re have ruled out support for a controversial mutual fund proposed for the Australian coal industry due to their climate and coal policies would rule out their involvement in the scheme.
The coal industry mutual fund has been touted as a potential solution to the insurance challenges faced by the Australian coal industry, after insurers increasingly refuse coverage because of concerns about global warming and climate risk.
The National Party is now demanding the Australian government establish a $250 billion slush fund to lend public money to mining companies to finance and insure coal projects that the private sector is unwilling to support. The proposed loan facility could support the creation of a coal industry mutual fund.
The commitments from reinsurers not to support the proposed mutual fund come as an insurance policy for the Adani Carmichael coal mine expired last week. Lloyd’s syndicate Apollo previously committed to not renewing a construction policy for Adani’s mine.
The expiry of the policy raises fresh doubts about where Adani is obtaining insurance cover and whether Adani is pushing for the establishment of a coal mutual as a solution to its continued insurance woes.
Pablo Brait, campaigner with Market Forces said: “Australia is the second largest coal exporter in the world, so it’s not surprising that reinsurance companies like Munich Re and Swiss Re are distancing themselves from a mutual fund that could insure the entire Australian coal industry.
“The fund would support the development of massive new coal mines at a time when science is telling us that coal has to stay in the ground if we are to hit the goals of the Paris Climate Agreement.”
“Swiss Re and Munich Re’s commitments should serve as a warning to other reinsurance companies who may be approached to support the Australian coal industry mutual fund. Any association with a mutual fund underwriting the Australian coal industry would be a reputational disaster.
“All reinsurance companies should be publicly distancing themselves from this scheme that would extend a lifeline to Australian coal mining and accelerate the devastating impacts of climate change.”
Lindsay Keenan, European Coordinator of the Insure Our Future network said: “Despite 32 of its syndicates publicly ruling out involvement in the Adani Carmichael coal mine, Lloyd’s has so far refused to make a market-wide commitment and so allows other Lloyd’s syndicates to continue to insure Adani. However, even Lloyd’s has clearly stated that the coal mutual proposal would go against its coal policies due to come into force next year.”