Munich Re, the world’s biggest reinsurer, said it would keep underwriting coal-related businesses, defying investors keen for it to follow a partial ban by its rival Swiss Re.


It, however, said it looked at the issue “repeatedly”.


Policymakers are pushing companies to do more to help meet a target, agreed in Paris in 2015, to limit global warming to below 2 degrees Celsius. Investors are increasingly using their financial muscle to reward those at the forefront of that transition.


Swiss Re, world number two by share value, said this week it would not reinsure any company for which thermal coal represents more than 30 percent of its business.


It follows French peer Scor, which last year said it would stop underwriting new thermal coal mines.


While not enough for some campaigners, the moves are seen forcing smaller insurers to reconsider underwriting companies involved in coal production. Reinsurers help insurers share the burden of large risks in return for part of the premium.


Despite being a vocal supporter of the Paris deal, Munich Re said it did not plan to copy Swiss Re in limiting its underwriting of coal companies.


“Munich Re will continue to insure all types of companies, taking into account an assessment of all risk aspects – including environmental, social and governance (ESG) criteria,” a spokesman told Reuters.



That position could become increasingly untenable, though, as investors seek more detail from the companies they own, driven on by policymakers, particularly in Europe, leading Munich Re investors told Reuters.


“From a risk perspective, every insurer should have a (underwriting) policy on coal,” said Ingo Speich, fund manager at Union Investment, a top-10 Munich Re investor.


“We haven’t seen any strict policy yet. Is it bad for the company from an outside perspective? In general, yes.”


Sasja Beslik, head of sustainable finance at Nordea, whose fund arm is a top-30 investor in Munich Re, said the Swiss Re move was significant and while others were not moving quickly enough, they would also be pushed by investors.


“Not only us, but the entire industry,” Beslik said, citing plans by the European Commission to force investors to integrate sustainability into their decision-making.


Reducing insurance coverage of the coal sector raises costs for coal power generation, “which is important given the need to rapidly decline coal use to meet carbon targets”, another top-20 investor said.


Hermes Investment Management, a shareholder advisor to institutions running more than 300 billion pounds ($397.35 billion) in assets through its EOS team, said it was currently engaging with Munich Re on climate change, among other topics.


Investors and lobby groups say changing underwriting behaviour is crucial to encourage a transition away from coal, the biggest emitter of carbon.


No firm has yet opted to stop insuring the industry completely, though, as increased climate change risk can lead to higher profit-boosting premiums and coal demand remains strong, particularly in developing countries.