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By Terry McMullan

Setting aside the dark shadow of pandemic uncertainty that sits over much of Australia at present, and also ignoring for a moment the damage that regulatory changes and a long string of natural catastrophes have wrought on locally owned insurers’ annual returns, there is a question which has been lingering for several months without an answer. That is, are Australia’s insurance leaders a bunch of “woke” corporate activists?

The question – raised by a federal minister – arises from the long campaign of India’s Adani Group to secure insurance for its Carmichael coal mine in north Queensland.

Adani was fairly low-key in its drive over the past couple of years to secure long-term insurance cover from local and/or international insurers, even as it battles growing opposition from opponents who see coal as a prime cause of climate change and an existential threat to the planet.

But Adani is not alone. In May it joined the entire fossil fuel industry in howling out their frustration during a parliamentary inquiry into the prudential regulation of investment in Australia’s resources sector and other export-led industries.

The inquiry, called by the Joint Standing Committee on Trade and Investment Growth, hasn’t reported to Parliament on the issue yet, and no one seems to know when it will.

While they would be expected to complain that insurers aren’t playing fair, Adani and other fossil fuel companies told the inquiry the insurers’ “misconceived” decision to end or reduce their involvement with the non-renewable energy sector risks harming Australia’s economic prosperity.

Squarely in the firing line were IAG, Suncorp and QBE, who have each announced deadlines to cut their links with the thermal coal industry.

“These Australian insurance companies appear to have followed a global divestment push led by European insurance companies with little to no regard to their national responsibilities to the workers and companies of Australia,” Adani says.

Privately owned Brisbane company BMD Constructions joined in, saying it had been unable to secure the insurance it needed to construct a section of the railway line linking the mine with the port at Mackay.

“It cannot be the case that companies performing lawful, government-supported works on which the country is dependent, are not supported by the finance and insurance industries that allow these works to be performed,” BMD said.

One of the figures behind the parliamentary inquiry is National Party MP Keith Pitt, who has been Federal Resources, Water and Northern Australia Minister since last November. We know where he stands on this issue because when the inquiry was launched in February, he went full redneck in blaming the coal miners’ finance and insurance dilemmas on “corporate activism”.

So, are insurers within their rights in refusing to provide insurance? Can we expect a shower of recommendations to spring from the committee for legislation that forces insurance companies to provide cover?

And (most intriguingly) are the insurance industry’s Zegna-suited chief executives really a bunch of radical activists intent on destroying capitalism in a quest to save the planet?

To spare you the suspense, the answers are yes, almost certainly not and no.

The fossil fuel industry’s undoubted political power, and the importance of the coal-mining electorates to the federal Liberal/National coalition can’t be underestimated, but let’s be clear about this.

As the past few years have demonstrated, the insurance industry is paying the price for governments’ slow progress in meeting the challenges posed by an existential threat, global warming. By imposing premium rises that equate to the technical cost of the risk, they are doing their job. They are also protecting their companies when they show little or no interest in protecting coal miners’ assets.

They are merely reflecting the international (re) insurance industry’s determination to not support projects that bring our world ever closer to a horrendous future.

Australia’s prudential regulator requires insurance companies to hold substantial reserves and sufficient reinsurance so they can pay claims. It also requires them to “actively consider” the direct and indirect effects of climate change so they can take “effective action” now to promote strong understanding and management of the potential financial impacts of a changing climate on current and future business prospects, allowing well-managed entities to minimise costs and optimise benefits.

For investors, the issue is apparently a no-brainer. As Insurance Council Chief Executive Andrew Hall has pointed out, major investor groups around the world simply want the industry to treat climate change as a major financial risk.

As individuals, we who work in the insurance industry have a right to be sceptical about climate change, even if such scepticism requires us to ignore the increasing threat to the industry from Nature’s increasingly volatile behaviour.

But as a collection of companies that belong to an interlocked global system of financial protection, the insurance industry has no choice but to hold to its belief that activities which bring climate change and its associated perils closer are increasingly insupportable.