Zurich makes minor move away from underwriting oil and gas

Zurich has vowed to no longer insure new greenfield oil exploration projects unless “meaningful transition plans are considered to be in place”.

The insurer has also committed to no longer underwriting oil, gas drilling and production in some parts of the Arctic.

However, the Insure Our Future campaign, which is a global coalition of non-governmental organisations and social movements pressuring insurance companies to exit the coal, oil and gas business, noted that Zurich’s revised greenfield oil policy still allows the insurer to continue covering oil and gas expansion.

Plus, the insurer’s Arctic and tar sands policy only excludes an estimated 10.4% of short-term oil and gas expansion plans, according to Insure Our Future.

A spokesperson for Zurich told Insurance Times: “Our underwriting strategy for the energy sector focuses on supporting our customers in the transition to a 1.5 [degree] Celsius pathway. We are engaging with them on their transition plans as we progressively phase out fossil fuel underwriting.

”Following restrictions on coal, oil sands and oil shales introduced since 2017, we will from 2022 no longer underwrite new oil exploration projects and engage with our oil and gas customers to assess how their transition plans align with a 1.5C future. This includes an assessment of the role of new gas projects in displacing more carbon intense fuels.

”Our next steps will also be informed by the guidance that is expected later this year from the Science Based Targets initiative on the oil and gas sector and the output of the Net-Zero Insurance Alliance on the methodology for measuring the carbon intensity of underwriting.”

As part of the Net-Zero Insurance Alliance, which brings together 15 insurers and reinsurers, and help to accelerate the transition to net zero emissions economies, Zurich has committed to align all of its business activities with a pathway to limiting global warming to 1.5 degree Celsius. 

The International Energy Agency and other climate scientists agree that such a pathway cannot include any new oil and gas projects.

Momentum needs to accelerate

The Insure Our Future campaign acknowledges Zurich’s move to shift away from insuring oil and gas projects, but it called on the insurer to take more meaningful action.

The campaign group’s 2021 Scorecard on Insurance, Fossil Fuels and Climate Change report, published in November 2021, found that Zurich was losing its climate leadership to more ambitious insurers.

Following Zurich’s updated fossil fuel policy, its fossil fuel underwriting score would improve marginally from 3.2 to 3.5, but the insurer would remain in 5th place.

Peter Bosshard, coordinator of the Insure Our Future campaign, said: “The announcements from Zurich, and previously Axa, show that insurance companies know they need to move away from oil and gas. However, the momentum needs to accelerate past the current baby steps.

“In order to fully align its oil and gas underwriting with climate science, Zurich needs to immediately stop insuring all new oil and gas projects, not just new oil exploration projects in companies that lack ‘meaningful transition plans’.”

SunCorp and KBC, two medium-sized insurance companies from Australia and Belgium respectively, have committed to no longer insuring any new oil and gas production projects.

Campaigners argue that Zurich, Axa, Allianz, Munich Re and other major oil and gas insurers should follow suit.

Insure Our Future recommended that going forward, insurers should use the Global Oil and Gas Exit List - a public database that covers 887 oil and gas companies, enabling users to readily identify the largest oil and gas expansionists - to define the scope of oil and gas policies.

Angelina Dobler, climate campaigner at Campax, said: “Zurich’s policy on oil and coal has been long overdue and shows that the public pressure on fossil fuel insurers is working.

“While the small steps of no longer insuring new greenfield oil exploration projects and oil and gas drilling in the Arctic are certainly welcome, they are far from enough. As a self-proclaimed leader in climate change, Zurich has an obligation to stop insuring all new oil and gas projects now.”