New coal mining projects for thermal energy will no longer be insured or financed by Tokio Marine Holdings in Japan. This will apply to projects both in Japan and abroad.
The Nikkei newspaper said that Tokio Marine is the first Japanese insurer to take this step and that other companies in the industry are expected to follow suit in the future. In recent years, several Western insurers, such as Allianz, Swiss Re, Zurich, and SCOR, have made measures to get out of the coal energy industry altogether.
Japanese property and casualty insurers — Tokio Marine, Sompo Japan, and Mitsui Sumitomo – announced intentions not to use coal. Tokio Marine’s two competitors and other participants in the sector are likely to follow suit now that the company has taken real action.
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When it comes to insuring coal mining projects, the Japanese insurance sector earns about 10 billion (SG$122 million) each year. Although under pressure to move their company towards more environmentally friendly energy production techniques, insurers are hesitant to do so for various reasons.
Coal mining companies will struggle to stay afloat if they are not protected against risks such as accidents, fires, and natural catastrophes.
Industry research company IBISWorld estimates that between 2015 and 2020, the worldwide coal mining market would have grown by 15% to reach US$661.6 billion. As a result of the negative public image of fossil fuel energy caused by its contribution to climate change, investors are becoming more cautious of coal.