South Korea’s two general insurers Samsung Fire & Marine Insurance (Samsung FMI) and Hyundai Marine & Fire Insurance (Hyundai MFI) have no plans to phase out existing insurance underwriting for coal, according to their latest ESG reports released in July 2022.
Solutions for Our Climate climate researcher Sooyoun Han said, “Coal projects are too expensive and risky to operate without insurance. When insurers exit from coal, this forces all the risk back onto the coal companies, making business-as-usual unviable.”
While new coal projects are in decline globally, over 2,400 coal-fired power plants are in operation in 79 countries, including South Korea. With far too many operating coal projects, civic groups have been calling for insurers to retract their existing insurance coverage to operating coal plants and limit underwriting for companies that rely on coal for their revenue or power production. Samsung FMI and Hyundai MFI’s current policies do not align with such demand.
In 2021, Samsung FMI was the largest coal insurer in the country with $13.3bn of coverage for coal plants, and Hyundai MFI was the third largest with $9.4bn – adding up to almost half of South Korea’s total coal underwritings.
Several major insurers have declared more ambitious coal-exit policies after pressures from civil society. Recently, Sompo, one of Japan’s largest non-life insurers, became the first Asian insurer to restrict insurance and investment in coal companies without transition plans by 2025.
Mr Han said, “Insurance companies need to understand that the fossil fuel industry is not their friend. Climate-related natural disasters result in economic losses rising at 5% to 7% each year and insured losses at 250% in the last 30 years.
“Many investors now view coal policies at insurance companies as an indicator of forward-looking business management. If Samsung FMI and Hyundai MFI want to remain competitive, net-zero insurance is the only pathway.”
Solutions for Our Climate is a South Korea-based group that advocates for stronger climate policies and reforms in power regulations. M