Thermal power plants are finding it difficult to obtain reinsurance cover in international markets as global giants tighten their environment, social and governance (ESG) policies. This has created capacity constraints for insuring coal-fired power projects, which are too big for the balance sheets of domestic insurers.
Most of the reinsurance markets in the West have closed the doors to coal-based projects. On December 10 last year, Munich Re had announced that it has stopped insuring coal-fired power plants. Last month, Swiss Re announced that it was accelerating its race to achieve net-zero status in carbon emissions in its portfolio. “We also revised our oil & gas policy in 2020 and, beginning in 2021, are gradually withdrawing insurance support for the most carbon-intensive oil and gas production,” the reinsurer said.
Insurance marketplace Lloyds of London also said in December that it is scaling back its exposure to coal and oil sands. European primary insurers like Axa and Zurich had already pulled back from underwriting fossil fuels such as coal and oil sands.