The Net-Zero Insurance Alliance (NZIA) has scrapped all requirements for member firms to set and publish emissions reduction targets following a mass exodus of members in recent months.
In a statement, the NZIA said members would be "responsible and publicly accountable for any targets they set, the methodologies used to set them, the timeline on which they decide to publish any targets, and the progress they are making".
Furthermore, the coalition's target setting protocol will now serve as a voluntary best practice guide for insurers and reinsurers "to aid in measurement, standardisation and comparability" of targets.
The move follows a turbulent period for the NZIA which began with the departure of founding member Munich Re in March, due to antitrust concerns.
This prompted a series of departures from the group, leaving it with only 12 remaining members, down from its peak of 29.
Peter Bosshard, coordinator of the Insure Our Future campaign, told InsuranceERM it was unfortunate that the alliance had "caved in to fossil fuel lobbying and abolished the last material requirement which the alliance members still have to fulfil".
"This reduces the alliance to another industry talkshop and an empty shell," he added.
Bosshard urged regulators to "step up and create a level playing field which the alliance was hoping to do".
He added: "Regulators should require mandatory science-based transition plans for insurance companies and the International Association of Insurance Supervisors, which will meet in Tokyo in November, should put this on their agenda."
Bosshard also stressed Insure our Future "would continue to hold individual insurance companies to account for the commitments that they made".
Aviva's chief executive Amanda Blanc this week defended the withdrawing NZIA members, saying they had been "caught in political crossfire".
A source close to NZIA member Generali told Environmental Finance's sister publication InsuranceERM it was spearheading an effort to encourage third regulators to join the alliance and this could encourage departing members to consider rejoining.
The source added regulators have already reacted positively to this proposal.
An anonymous insurance regulator told Environmental Finance's sister publication InsuranceERM there are areas for "engagement and good discussion" between the Glasgow Financial Alliance for Net Zero (GFANZ), which comprises alliances including the NZIA, and regulators.
The regulators added there is also scope for the GFANZ to engage "with forums with similar climate risk management and sustainable finance/transition goals like the Network for Greening the Financial System."
When asked if it would consider rejoining the alliance, a Munich Re spokesperson told Environmental Finance's sister publication InsuranceERM its statement for explaining the reasons it left the NZIA "are still valid". Aviva declined to comment when asked for reaction to the scrapping of the targets.