Carbon Underwriting Policies Drive Significant Reduction in Coal Insurance Coverage

New research from the University of Zurich and Swiss Finance Institute highlights the impact of carbon underwriting policies in the insurance sector, particularly regarding coal mining operations. These policies have led insurers to reduce coverage for coal mines by 16%, with insured coal volumes dropping by 56%, signaling a significant shift in risk management approaches toward fossil fuel industries. Following the adoption of these policies, the probability of insurers terminating coverage with coal mines increased by 13 percentage points, contributing to higher mine abandonment rates by 3.6 percentage points. Mines that continue to operate under reduced coverage have responded with an 8% decrease in coal production and a 15% reduction in employment, illustrating the tangible economic consequences in affected regions. The research also finds a notable regional disparity, with European insurers more actively enforcing underwriting restrictions compared to their Asian and U.S. counterparts. While coal underwriting policies are becoming widespread—implemented by 80% of major insurers by 2023—restrictions on oil and gas underwriting remain less common and less stringent. The study concludes that effectively designed and enforced carbon underwriting policies can serve as powerful tools for insurance companies to influence climate transition, emphasizing the importance of transparency and policy rigor for maximizing sectoral impact.