The 'big picture' of ESG
The shifting sands of insurance risk in Australia Adam Battista, Executive Director, CRE
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n the last five years, insurers and financiers have been forced into a scenario where they are not only concerned that the risk of climate change will cost them money, but that they will also be seen as socially responsible and vicariously liable. These pressure points see most insurers and financiers capitulate, increasing premiums and/or reducing cover.
And while transitioning to a more sustainable energy mix is clearly everyone’s goal, this pre-emptive strike on fossil fuels and commodities has been outside of the industry's ability to directly control or respond to with any degree of fairness. The coal mine that markets insured last year is the same coal mine insurers are declining or tapering off on their participation this year; not because the risk itself has changed but through governmental and societal pressures. Producers and contractors alike are uniformly faced with significantly increased premiums, their cover being eroded through abridged terms and conditions, the number of insurers available to quote competitively reducing, or simply viable cover not being available at all. This article discusses the underlying issues surrounding the perceived risks, using the wide lens of the insurance advisor. Why have insurers' appetites for coal changed? As insurance advisers, we invest significant time explaining to clients why their business appears to have such a demonstrably increased risk profile, from an insurance perspective. In some cases, these changes are entirely justified, such as:
Photo: Geoff Hunter
The insurance and finance sectors, along with some world governments, are generally failing to reconcile that their blackand-white treatment of the coal industry’s perceived risk is causing more damage than it is preventing.
• large and/or frequent claims • patent increases
BBMC Yearbook 2022
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