Coal miners forced to save for a rainy day by insurance snub
LONDON - Some coal producers are having to set aside tens of millions of dollars to cover their own risks as they are cut adrift by insurers, making it more difficult and costly to do business amid a surge in demand for the fossil fuel.
Reuters spoke to five coal mining executives who said that the industry is increasingly moving towards self-insurance and self-finance, as the difficulty of securing coverage from insurers makes loans more expensive or unavailable. "In recognition of ESG and related factors shrinking the availability of thermal coal insurance capacity globally, Seriti has embarked on a journey toward increased self-insurance," Gain told Reuters via email.
But the need to earmark funds for self-insurance ties up money on the balance sheets of coal companies and could leave them vulnerable to large costs when something goes wrong, industry analysts say. Thermal coal insurance rates rose more than 20% last year, it said, above the 7.3% rise in the benchmark Marsh Global Insurance Market Index.
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Coal miners forced to save for a rainy day by insurance snubSome coal producers are having to set aside tens of millions of dollars to cover their own risks as they are cut adrift by insurers, making it more difficult and costly to do business amid a surge in demand for the fossil fuel. Dozens of insurers have announced restrictions on their cover for the coal industry, particularly for new projects, in response to pressure from shareholders, governments and environmental groups who want to limit coal's contribution to global warming. This follows similar moves by banks to restrict their coal financing activities.Some coal producers are having to set aside tens of millions of dollars to cover their own risks as they are cut adrift by insurers, making it more difficult and costly to do business amid a surge in demand for the fossil fuel. Dozens of insurers have announced restrictions on their cover for the coal industry, particularly for new projects, in response to pressure from shareholders, governments and environmental groups who want to limit coal's contribution to global warming. This follows similar moves by banks to restrict their coal financing activities.
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