Four South Korean insurers have become the latest firms to announce they are to halt the insurance of the construction or operation of new coal power projects.
Hyundai Marine & Fire Insurance, Hana Insurance, DB Insurance, and Hanwha General Insurance have all made public announcements on the move away from coal power projects to the delight of climate activists.
It comes hot on the heels of a call by UN Secretary-General António Guterres’s stop underwriting fossil fuels earlier this month at the Insurance Development Forum.
Korea Beyond Coal, a network of civic groups advocating for a complete coal phase-out in Korea by 2030, together with global coalition Insure Our Future, contacted the country’s top 11 non-life insurance companies, which have underwritten or provided investments of approximately US$52 billion for coal plants, urging them to stop underwriting coal power projects in Korea, including Korea’s last coal power project, Samcheok Blue Power.
In response, Hyundai Marine & Fire Insurance, Hana Insurance, DB Insurance, and Hanwha General Insurance, whose total coverage makes up almost half of the nation’s coal insurance market, became the first four insurance companies to commit to exiting from underwriting both coal plant construction and operations.
DB Insurance, Korea’s second-largest coal insurer, added that it would also gradually retract their existing insurance coverage to operating coal plants. Two others, NH Property & Casualty Insurance and Samsung Fire & Marine Insurance, said they would no longer underwrite construction for new coal plants but did not make any commitment on operation-related insurance.
South Korea currently has seven new coal power units under construction, with three expected to start operations by the end of this year.
“As new coal power projects are a major obstacle for the country to enhance the national 2030 emissions target and achieve net-zero emissions by 2050, whether these projects can attract insurance will not only play a major role in their viability but also Korea’s ability to meet current climate targets and strengthen them,” said Korea Beyond Coal. “If the last coal power project in Korea, the 2,100MW Samcheok Blue Power project, is operated for 30 years, the country would phase out coal power by 2054, in contradiction with its 2050 carbon neutrality pledge.”
Yuan Peng, Climate Finance Researcher at Solutions for Our Climate, commented: “The four major Korean insures’ — Hyundai Marine & Fire, DB Insurance, Hana Insurance, and Hanwha General Insurance — plans to exit coal are a major step in Korea, hinting at the collapse of the coal-insurer “cartel” in Korea. Korean insurers tend to participate in high-risk projects like coal power plants as a consortium to minimize the risk. Having four of them fall out of the coal insurance market means even higher liability for the remaining insurance companies, making coal projects undesirable for everyone involved.
“Climate change is a serious financial risk for insurance companies. The cost of the escalating intensity and frequency of natural disasters will end up in these insurers’ hands, one of the reasons why major insurance companies like Allianz, AXA and Swiss Re committed to stop underwriting coal projects. With these apparent risks ahead, we urge the remaining Korean insurers to take a more proactive role in expediting a coal phase-out in Korea by stopping insurance for coal.”
Campaigners say they will now look to put pressure in Japan’s insurers to make the same commitment to exit coal power risks.
“Although Japanese major non-life insurers such as Tokio Marine, MS&AD and SOMPO adopted coal policies to not underwrite insurance or invest in new coal-fired power plants in principle, their policies include a wide range of exceptions that make them inconsistent with the goals of the Paris Agreement, explained Yuki Tanabe, Program Director, Japan Centre for a Sustainable Environment and Society (JACSES).
“At the very least, Japanese insurers should follow suit of Korean insurers and strengthen their policies to immediately stop underwriting coal to avoid being the global coal insurers of last resort.”
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