Press Releases

As fossil fuels are increasingly recognized as a key driver of climate change, Korean non-life insurers have been found to lack adequate underwriting and investment policies for oil and natural gas sectors. This raise concerns over the need for stronger policies to manage climate-related risks in the insurance sector.

According to KoSIF’s analysis of Korean non-life insurers’ underwriting and investment policies, insurers’ fossil fuel policies remain largely focused on coal, while the risks associated with oil and natural gas are being overlooked. KoSIF published these findings in its 『2022 Insuring Our Future Korea Scorecard』.

Among the nine insurers that responded to the survey, eight companies, excluding Samsung Fire & Marine Insurance, had not established underwriting policies for oil and natural gas. None of the insurers had adopted investment restriction policies for oil and natural gas.

The average score for fossil fuel underwriting policies, including coal, oil, and natural gas, was 1.5 out of 10, while the average score for investment policies was 1.7. These scores were significantly lower than those of the Global Top 10 property and casualty insurers, including Allianz, AXA, and Swiss Re, which scored 4.1 for underwriting policies and 3.9 for investment policies. Given that these global insurers and reinsurers are leading players in the insurance industry, Korean non-life insurers appear to need stronger efforts to close the gap with their global peers.

As of the end of June 2022, the total amount of fossil fuel-related financial support provided by the nine insurers stood at approximately KRW 105 trillion. Coal-related insured exposure amounted to KRW 38.1 trillion, while coal-related investment exposure reached KRW 6.6 trillion. Meanwhile, oil and natural gas-related insured exposure totaled KRW 56.8 trillion, and related investment exposure amounted to KRW 3.1 trillion.

KoSIF’s 2022 Insuring Our Future Korea Scorecard is the Korean version of the Insure Our Future Global Scorecard, using the same questionnaire and evaluation methodology. The Global Scorecard is published annually by Insure Our Future, a global campaign that highlights the role of the insurance industry in addressing the climate crisis. It assesses and scores the underwriting and investment policies of 30 major global property and casualty insurers and reinsurers on coal, oil, and natural gas.

Through the scorecard, the campaign calls on global insurers to stop providing insurance support for new fossil fuel projects and to phase out support for existing coal, oil, and natural gas operations in line with the 1.5°C climate target.

To meet the Paris Agreement’s 1.5°C target, global fossil fuel production must decline annually by 9.5% for coal, 8.5% for oil, and 3.4% for natural gas by 2030. Globally, insurers’ fossil fuel policies are expanding beyond coal to also cover oil and natural gas. In Korea, coal-related policies have become more common across the financial sector since the mainstreaming of coal-exit commitments that began in 2018. However, Korean insurers’ coal underwriting policies remain limited to new coal insurance, and no insurer has a concrete plan to phase out existing insurance coverage.

The report points out that Korean insurers need to expand their fossil fuel underwriting and investment restriction policies, which currently focus mainly on coal, to also cover oil and natural gas.

KoSIF also emphasized that, in order to manage climate risks, the insurance industry should establish concrete exclusion and watchlist criteria for underwriting and investment targets, using indicators such as companies’ fossil fuel-related revenue share, facilities, and production volume. The report further noted that insurers should develop phase-out strategies for fossil fuel assets, including oil and natural gas, while also identifying new opportunities toward a renewable energy-based system.

“With the publication of this report, KoSIF plans to continue engaging with Korean insurers,” said Karl C.S. Yang, CEO of KoSIF. “We will work to share the role of the insurance industry in addressing the climate crisis with financial authorities and private financial institutions, so that changes in the insurance sector can help reduce climate-related risks across Korean industry and serve as a foundation for the transition to a renewable energy-based system.”