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Interview: Coal and Insurance

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Group Communications &
Corporate Responsibility

Allianz SE
Königinstraße 28
80802 Munich
Germany

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“We encourage solutions for tomorrow’s climate. We anticipate the risks of climate change, work to protect and care for our customers and enable the transition to a low carbon economy."

Oliver Bäte, CEO Allianz SE

1. You stopped investing in coal some years ago, but you still insure it, how does this fit together?

While we are fully committed to the combat against climate change, its implications on our investment and insurance businesses are quite different.

We as Allianz support the transition to a decarbonized economy through investments in low-carbon energy sources such as renewables. Further, we have stopped investing in coal, aware of the two-degree-target of the Paris climate negotiations as well as the economic risks involved.

When it comes to insurance, the case is not so straight forward. We need to acknowledge that coal power plants still contribute a considerable share to most regions’ power supply. These existing plants obviously require insurance. Therefore, insurance of this infrastructure will be necessary as long as these plants are operating, and we also do offer it.

Allianz - Allianz climate strategy

Read a copy of our response to The Unfried Coal Campaign.

Unfriend Coal Campaign Letter

2. If you still cover such risks, does that mean insurance has no role in supporting the climate transition?

Of course it does!

Insurance is already playing a vital role in the energy transition, especially when it comes to accepting and mitigating risks for new low-carbon technologies. For example, we already ensure 20 operating offshore wind-parks and the construction of 35 more through our industrial insurance arm, Allianz Global Corporate & Specialty (AGCS).

On the flipside, the effect of stopping to accept certain (e.g. coal-related) risks is not so clear cut. Insurance is commonly offered in pools, meaning different companies share a given risk. Should one insurer step away from a particular risk, a competitor would usually fill the gap. The impacts on revenues aside -by simply walking away from existing risks (such as coal plants in operation), an insurance company pays no service neither to its clients, nor to society. Further, we think it is more productive if we remain in dialogue with our clients as a strategic and technical partner and support them in their energy transition.

We believe that the insurance industry needs to work towards a common understanding on how to deal with carbon-related risks.

Allianz - Katharina Latif, Corporate Responsibility Allianz
Katharina Latif is Head of the Corporate Responsibility Team of the Allianz Group.

3. What is your current underwriting practice for coal?

We continue to insure coal-based risks, but subject to a robust underwriting process. We developed a methodology for the assessment of coal-fired power plants including the assessment of emissions intensity, health and environmental impacts; they all are now standard items of our underwriting. In sum, we are increasingly more selective in providing insurance for coal-based business models.

4. What else are you doing to advance the energy transition?

We are a leading investor in renewable energies with more than 4.6 billion Euro invested and we plan to at least double our investments in the mid-term. Allianz Global Investors also offers several renewable energy funds for institutional investors who want to invest in low-carbon infrastructure.
Allianz is developing and providing insurance solutions for renewables technologies and energy efficiency around the world, e.g. by offering tailor-made risk insurance for complex renewable energy projects including business interruption, liability or technical failure. We also offer insurance covering the financial loss from reductions in annual energy output compared to expected annual energy yields for renewable energy plants.
Further, we provide over 150 Sustainable Solutions for our customers – from special tariffs for electric cars to environmentally-themed funds.
For further details and areas of action for us, please refer to the Allianz Climate Strategy (see below).

The Corporate Responsibility team defines and executes the Group’s Corporate Responsibility strategy. We integrate ESG aspects into the insurance and investment business, conduct stakeholder dialogs with NGOs and peers, and publish the annual sustainability report and participate in sustainability ratings. We furthermore foster social inclusion – mainly through the Group-wide Encouraging Future Generations program – with employee volunteering, community service and partnering with organizations such as SOS children’s Villages.

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Our Climate Change Strategy

Allianz - Allianz climate strategy

Read more about the climate change strategy at Allianz in our full PDF report.

Climate Change Strategy 

Our ESG approach

For insurance and investments alike, we always consider certain ESG (environmental, social, governance) factors. Here’s how we do business regarding those risks.

ESG Integration Framework

Allianz - ESG_Integration_Framework_Screenshot

Read more about the ESG Integration Framework in our full PDF report.

Report 2017