Allianz Announces Tough Oil & Gas Policy to achieve Climate goals

Published on: 2 May 2022 09:45 AM

Allianz, an insurance and asset management company, announced that from 2023 beginning, it would stop issuing new property and casualty insurance to finance new oil and gas projects and cease renewing present contracts. The company said it would no longer provide insurance, facultative reinsurance, or reinsurance for a particular risk or specified bundle of risks, or funding to companies that generate more than 10% of their revenue from oil sands, down from 20% previously.

As part of its attempts to align its underwriting policies with the global climate target, Allianz, Europe's largest insurer, revealed that it plans to adopt a harsher position on insuring the oil and gas industry.

The move is the latest by a major insurer to lower insurance for the energy sector, which is a source of greenhouse gas emissions and comes as experts warn that the window for limiting the worst effects of global warming is quickly closing.

It follows a report released last year by the International Energy Agency, which indicated that if the aim was to be attained, no additional investment in new oil and gas fields was required.

With pressure rising on companies to speed up their efforts to cut emissions, Allianz said that it would stop granting new property and casualty insurance to fund new oil and gas projects in 2023 and that it would stop renewing existing contracts in July 2023.

Exploration and development of new oil and gas resources; construction of new mid-stream oil infrastructure; construction of new oil power plants; and projects related to the Arctic, Antarctica, coal-bed methane, extra-heavy oil and oil sands, and ultra-deep sea fields would be exempted.

Allianz board member Günther Thallinger said:

"With these new guidelines, Allianz strengthens its commitment to contributing to the economy’s orderly decarbonization."

Allianz declared in January 2025 that it would only insure oil and gas firms on a science-based road to net-zero emissions by 2050, including the big oil companies that accounted for the majority of emissions.

At the same time, Allianz declared that it would no longer provide insurance, facultative reinsurance, or reinsurance for a specific risk or defined package of risks, as well as the capital, to companies that draw more than 10% of their revenue from oil sands, down from 20% earlier.

Insure Our Future, a non-profit, praised Allianz's action, saying it "raises the bar for the insurance sector" and urging others to follow suit.

According to the company, Allianz is the tenth major insurance firm to apply oil and gas limits, and there is now "real momentum for other insurance companies to adopt oil and gas policies that fit with climate science."

Swiss Re, the second-largest reinsurer in the world, stated in March that it would no longer insure most new oil and gas projects, joining several other reinsurers who have tightened their policies in recent months.

Source: Reuters