The move is welcomed, but there are calls to restrict coal from its treaty business
Asia’s second-largest reinsurance company, Korean Re, will no longer be providing reinsurance for new coal mining or power plant construction from next month. It joins over 60 percent of the global reinsurance market, which have already adopted coal-exit policies.
Last year, Swiss Re committed to phasing out coal from its treaty business by 2030 among OECD nations, and by 2040 globally.
Due to the large share of treaty business in reinsurance, pressure groups, including the Insure Our Future campaign, are urging other reinsurers to adopt similar coal-exit policies.
“Korean Re’s announcement to phase out new coal in its facultative business is meaningful progress for the industry. We expect the impact to be even larger if the company also restricts coal from its treaty business,” said Seungjun Lee, head of the ESG Research Center at the Korea Insurance Research Institute.
Korean Re’s current policy allows exceptions based on national energy policies or demand in developing nations, it points out. The reinsurer is one of the last remaining insurers of Korea’s coal power plants in the Philippines, Vietnam, and Indonesia.
“While we welcome this move from Korean Re, its new coal restrictions are weaker than the policies of all its international peers. They do not address reinsurance treaties for ongoing coal operations and even allow continued support for many new coal projects,” said Peter Bosshard, a coordinator of the international campaign at Insure Our Future.
“The policy also ignores the need to end support for new oil and gas projects. Korean Re should strengthen its fossil fuel policy so it reflects climate science and the best practices of the industry,” he added.
“A swift coal exit will ultimately improve Korean Re’s bottom line,” added Sooyoun Han, a climate finance researcher at Seoul-based Solutions for Our Climate. ”Not only will it reduce the amount of risk exposure from coal businesses, which are quickly becoming stranded assets, but from climate catastrophes that are exponentially increasing insurers’ financial liability.”