New climate policy from AXIS Capital increases pressure on U.S. insurers to follow suit
October 20, 2021 – Today, insurer AXIS Capital (NYSE: AXS) announced new policy measures restricting insurance and investments in coal, tar sands oil, and Arctic oil and gas, as part of the company’s efforts to accelerate the transition to a low-carbon economy. In an unprecedented step for a North American insurer, AXIS Capital has committed to stop insuring any company developing coal infrastructure and phase out all coal business in line with a 1.5ºC pathway.
According to the updated policy, AXIS will not provide insurance for or make new investments in companies that are developing new thermal coal plants or mines or their dedicated infrastructure. Additionally, AXIS commits to lowering its thresholds defining coal companies to fully phase out thermal coal business from insurance, facultative reinsurance, and investment portfolios by 2030 in OECD countries and the EU and 2040 globally.
“We welcome AXIS Capital’s new commitments on coal as a major win for the climate. By ruling out coal developers and setting out 1.5ºC-aligned dates for phaseout of the sector entirely, AXIS Capital has raised the bar for insurers in the U.S. and globally,” said Elana Sulakshana, Senior Energy Finance Campaigner at Rainforest Action Network. “As AXIS ramps up ambition, all eyes are on AIG, Berkshire Hathaway, Travelers, and other U.S. insurers that lack any coal restrictions. Furthermore, Chubb, The Hartford, and Liberty Mutual should take note and match these best practice measures, as their coal policies remain riddled with loopholes.”
More than 30 insurance companies have announced restrictions on coal insurance, which has made securing insurance coverage more difficult and expensive for coal projects and companies. However, only seven of these companies have committed to fully phase out coal, while just two have addressed their treaty reinsurance business, an area that AXIS Capital’s policy also fails to address.
There are far fewer policies limiting support for oil and gas, despite a growing scientific consensus that we must halt all fossil fuel expansion. Just this week, the International Energy Agency concluded that there is no justification for supporting new oil and gas projects under a net zero scenario.
“Today’s announcement is an important step towards a safe climate future, but AXIS Capital must now stop insuring all fossil fuel expansion, as there is no room in the global carbon budget for new oil and gas supply to stay within 1.5ºC,” added Sulakshana.
In addition to the new measures on coal, AXIS Capital updated its approach to two oil and gas subsectors: oil sands and drilling in the Arctic National Wildlife Refuge. On oil sands, AXIS Capital added additional criteria to define oil sands companies as those that “generate 20% or more of their revenues from oil sands,” which expands the scope of the policy beyond oil sands extraction companies to include those that operate in oil sands transport and refining. This builds on existing language that ruled out insuring new oil sands projects and companies holding more than 20% of their reserves in the sector.
AXIS Capital’s policy is part of a global shift of underwriting capacity out of the oil sands sector, which is threatening its ability to secure adequate coverage. AXIS is one of thirteen insurance companies that have adopted restrictions on insuring oil sands projects and/or companies, and one of sixteen that has dropped or ruled out coverage for the Trans Mountain pipeline.
AXIS also codified its January 2021 commitment to avoid projects in the Arctic National Wildlife Refuge and added criteria restricting involvement with companies heavily involved in drilling activities in the Arctic Refuge. To date, eight insurers have adopted policies that limit support for oil and gas drilling in the Arctic Refuge, according to the Gwich’in Steering Committee.
AXIS Capital’s policy, however, does not rule out support for oil and gas exploration and extraction in other parts of the Arctic, which also pose grave threats to Indigenous rights and local ecosystems, nor does it implement a broader policy to ensure that all of the projects it insures have obtained the Free, Prior, and Informed Consent of impacted Indigenous communities.
“It’s unfortunate that AXIS Capital would commit to one area of the Arctic but not another. Is one village worth more than another? Is one family worth more than another? Half measures won’t do anymore. AXIS Capital must commit to stop insuring all Arctic destruction,” said Nauri Toler, Environmental Justice Organizer at Native Movement.
At COP26 in Glasgow, the Insure Our Future coalition will release the annual Scorecard on Insurance, Fossil Fuels, and Climate Change, which evaluates and ranks the fossil fuel policies and climate leadership efforts of 30 global insurers, including AXIS Capital.