Challenge securing reinsurance from abroad for coal power plants

Thermal power plants are finding it a challenge to obtain reinsurance in international markets as global reinsurers tighten their environment, social and governance (ESG) policies and coverage of coalfired power projects is too big for the capacity of domestic insurers.

However, companies can work around the issue through innovation. One method is to break up the assets for separate policies and looking at combined limits, according to a report in Times of India

“Most reinsurers worldwide have stopped writing coal on a facultative reinsurance basis. However, they permit reinsurance on a treaty basis,” said Marsh India country head & CEO Sanjay Kedia. “Since most of the large western reinsurers are taking a hard stance on coal, we depend on other markets,” said Mr Devesh Srivastava, chairman of GIC Re.

Last December, Munich Re announced that it had stopped insuring coalfired power plants. Last month, Swiss Re announced that it was accelerating its race to achieve net-zero status in carbon emissions in its portfolio. Lloyds of London also said in December that it was scaling back its exposure to coal and oil sands. European primary insurers like Axa and Zurich have already pulled back from underwriting fossil fuels such as coal and oil sands.

Source: Asia Insurance Review