Major insurers withdraw support for deep sea mining

Major insurers withdraw support for deep sea mining | Insurance Business New Zealand

Environmental

Major insurers withdraw support for deep sea mining

Move spotlights industry’s increasing concerns over environmental and financial risks

Environmental

By
Roxanne Libatique

Three major insurers, Hannover Re, Zurich Insurance Group, and Vienna Insurance Group (VIG), have joined Swiss Re in excluding deep sea mining (DSM) from their underwriting portfolios.

This decision highlights a broader trend within the financial industry, underscoring increasing concerns over the environmental and financial risks tied to DSM.

Why did insurers exclude deep sea mining from underwriting portfolios?

“The stance of these major insurance companies to exclude DSM sends a powerful message to the entire financial sector about the viability of DSM,” said Andy Whitmore, finance advocacy officer at the Deep Sea Mining Campaign (DSMC), an association of non-government organisations and individuals who advocate against commercial exploitation of oceans.

Hannover Re ceased underwriting DSM projects in 2023. Zurich has confirmed to DSMC its decision to avoid insuring DSM activities. Similarly, VIG has stated its exclusion of DSM, grouping it with other unconventional mining methods like shale gas and shale oil.

These moves come amid ongoing negotiations by the International Seabed Authority in Jamaica to establish regulations for DSM. Insurance has been a focal point, with delegates stressing the necessity for comprehensive insurance policies to cover all aspects of deep-sea mining.

Impact of excluding deep sea mining from underwriting activities

Whitmore said the refusal of major insurers to cover DSM increases the financial challenges and risks for companies interested in this type of mining.

“With leading insurers refusing to cover DSM, the financial burden and risks become increasingly insurmountable for companies pursuing this type of mining. And the regulations for DSM should eventually require insurance in order for companies to receive a mining licence. The risks are exemplified by The Metals Company (TMC), which is attempting to secure a mining licence from the ISA despite incomplete regulations. TMC themselves note the risk of not being able to obtain insurance in their annual report to the Security Exchanges Commission,” he said.

The DSMC said it remains dedicated to addressing the threats posed by deep sea mining to the oceans, using a strategy that combines research, advocacy, and collaboration with frontline communities and international partners.