Major Korean insurers cut ties with coal power

Written by Adam Cadle

22/06/2021

Korean non-life insurers DB Insurance, Hyundai Marine & Fire Insurance, Hanwha General Insurance, and Hana Insurance, which have provided nearly half of the total US$52bn coal underwritings by Korean insurance companies, have said they will now cut ties with coal power.

The insurers will no longer provide any insurance coverage for construction and operation of new coal power projects.

Korea Beyond Coal — a network of civic groups advocating for a complete coal phase-out in Korea by 2030 — together with global coalition Insure Our Future, contacted the country’s top 11 non-life insurance companies, which have underwritten or provided investments of approximately US$52bn for coal plants, urging them to stop underwriting coal power projects in Korea, including Korea’s last coal power project, Samcheok Blue Power.

In response to the demand, Hyundai Marine & Fire Insurance, Hana Insurance, DB Insurance, and Hanwha General Insurance, became the first four insurance companies to commit to exiting from underwriting both coal plant construction and operations. DB Insurance, Korea’s second-largest coal insurer, added that it would also gradually retract their existing insurance coverage to operating coal plants. Two others — NH Property & Casualty Insurance and Samsung Fire & Marine Insurance — said they would no longer underwrite construction for new coal plants but did not make any commitment on operation-related insurance.  

KB Insurance, another financial institution which already pledged to coal divestment, has declined to comment on their plans for future underwritings for coal power projects along with four others -- Heungkuk Fire & Marine Insurance, MG Non-life Insurance, Meritz Fire & Marine Insurance, and Lotte Non-Life Insurance.

South Korea currently has seven new coal power units under construction, with three expected to start operations by the end of this year.

Solutions for Our Climate climate finance researcher Yuan Peng said: “Korean insurers tend to participate in high-risk projects like coal power plants as a consortium to minimise the risk. Having four of them fall out of the coal insurance market means even higher liability for the remaining insurance companies, making coal projects undesirable for everyone involved.

“Climate change is a serious financial risk for insurance companies. The cost of the escalating intensity and frequency of natural disasters will end up in these insurers’ hands, one of the reasons why major insurance companies like Allianz, AXA and Swiss Re committed to stop underwriting coal projects. With these apparent risks ahead, we urge the remaining Korean insurers to take a more proactive role in expediting a coal phase-out in Korea by stopping insurance for coal.”

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