Insurers must drop ‘harmful’ practices for more sustainable underwriting: Fidelis CEO
Bermuda-based Fidelis Insurance Holdings has strengthened its underwriting guidelines around fossil fuel risks in line with its “commitment to sustainability”.
The firm said its new guidelines span both environmental and social topics, with four umbrella guidelines covering environmental, human & labour rights, animal welfare, rule of law, in addition to six industry-specific guidelines on defence & armaments, forestry & agriculture, mining, coal, oil & gas, nuclear.
Fidelis said this was a continuation of its forced labour clause to marine cargo business since 2020 and taking a strong stance on animal testing.
The company noted that it had stopped providing direct insurance for thermal coal plants, projects and infrastructure in 2020, but with the latest guidelines the restrictions around fossil fuels have been expanded.
"This reflects the key role insurance must play in supporting the transition towards a low-carbon economy and is in line with Fidelis’ recently made pledges as a member of the Net-Zero Insurance Alliance (NZIA)," Fidelis stated.
The new guidelines will initially apply to insurance business, with an approach being explored for treaty reinsurance, it noted. Fidelis plans to further refine its approach in 2023 in line with the NZIA commitments, which require the setting of intermediate decarbonisation targets within six months of the publication of the NZIA target-setting protocol (expected in January 2023).
Fidelis already has restrictions in place on fossil fuels within its investment portfolio, with an exclusion on coal as well as oil & gas (unless below 25% of revenues).
Richard Brindle (pictured), chairman and group chief executive officer, said: “The insurance industry has a hugely important role to play in holding companies to account and making change happen – but nothing changes unless we are prepared to walk away from activities that are harmful to the environment, people, society and animals. We don’t see enough of this yet but we hope that insurers – and brokers – will increasingly engage with their clients to ensure that the insurance industry is not supporting damaging business practices.”
Olivia Brindle, head of sustainability, added: “Fidelis has a strong commitment to doing the right thing, but we also believe that sustainable underwriting is good risk management and that there is a long-term link between ESG and performance. A sustainable policy on fossil fuels is key to meeting decarbonisation commitments as well as mitigating climate risk, so while we do not have all the answers yet, we know we need to start taking action today.”
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