05 December 2019
A number of factors drive insurers decisions to divest from coal, beyond the pure fact that it makes them look good, according to Tobias Buecheler head of regulatory strategy at Allianz.
Asked by a member of the audience at the Insurance and Climate Risk (IRC) Conference if large insurers' commitment to exit coal investments was a 'PR stunt', Buecheler said the decision is in line with the balance insurers have to strike between being profitable, protecting policyholders and maintaining financial stability.
German insurers have learned the hard way about the risk of such assets, in the aftermath of the Fukushima Daiichi nuclear disaster, which occurred in Japan in 2011, he continued.
"Out of the blue, the German government decided to get out of nuclear energy, and this has had an impact on asset prices. Before that it was inconceivable that a conservative government would follow such a policy."
So divesting from coal is about risk management, Buecheler said, but it is also about providing the right products and services to customers.
"A lot of our customers care about this topic, so it is not only that you look at what is the maximum profit on the assets, but what is the maximum profit with products that people will still purchase. So, no, it is not only a PR stunt," he concluded.
Speaking on the same panel, Hugh Savill, director of regulation at the Association of British Insurers added that divestment strategies have limitations.
"In this country [the UK] it is relatively easy to divest from coal, less so in Poland," he said. "So what is next? The NGOs will come along and say 'splendid work you divested from coal, now divest from all fossil fuels. That will bring the economy to a halt. So I really don't think that is a particularly sensible strategy."