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🌍 '''Fossil fuel exclusion''' is an [[Definition:Underwriting | underwriting]] policy or [[Definition:Insurance policy | policy]] provision through which an [[Definition:Insurance carrier | insurer]] or [[Definition:Reinsurer | reinsurer]] declines to cover risks associated with the extraction, transportation, processing, or combustion of coal, oil, or natural gas. Emerging prominently in the mid-2010s as part of the insurance industry's response to [[Definition:Climate risk | climate change]], these exclusions represent a strategic decision to withdraw [[Definition:Insurance capacity | capacity]] from sectors perceived as contributing to [[Definition:Environmental risk | environmental harm]] or as carrying long-term [[Definition:Stranded asset risk | stranded-asset risk]]. The movement has been led primarily by large European insurers and reinsurers, with companies such as [[Definition:Allianz | Allianz]], [[Definition:AXA | AXA]], [[Definition:Swiss Re | Swiss Re]], [[Definition:Munich Re | Munich Re]], and [[Definition:Zurich Insurance Group | Zurich]] adopting exclusion policies of varying scope.

⚙️ In practice, fossil fuel exclusions range from narrow restrictions — such as declining to insure new thermal coal mines or coal-fired power plants — to broader policies encompassing oil sands, Arctic drilling, and infrastructure like pipelines and liquefied natural gas terminals. Some insurers apply exclusions only to direct [[Definition:Property insurance | property]] and [[Definition:Construction insurance | construction]] coverage, while others extend them to [[Definition:Liability insurance | liability]], [[Definition:Marine insurance | marine cargo]], and [[Definition:Directors and officers (D&O) insurance | D&O]] lines connected to fossil fuel companies. [[Definition:Reinsurance | Reinsurers]] implementing exclusions can amplify the effect by restricting [[Definition:Treaty reinsurance | treaty]] and [[Definition:Facultative reinsurance | facultative]] support for primary carriers still writing fossil fuel business. The scope, definitions, and phase-in timelines vary significantly across companies and jurisdictions, and industry coalitions such as the Net-Zero Insurance Alliance (NZIA) attempted to coordinate commitments before facing [[Definition:Antitrust | antitrust]] challenges, particularly in the United States.

⚖️ Fossil fuel exclusions sit at the intersection of [[Definition:Environmental, social, and governance (ESG) | ESG]] strategy, [[Definition:Risk management | risk management]], and political pressure, making them among the most debated topics in contemporary insurance. Proponents argue that withdrawing capacity accelerates the energy transition and protects insurers from [[Definition:Long-tail liability | long-tail liabilities]] analogous to those that emerged from [[Definition:Asbestos insurance | asbestos]] — particularly [[Definition:Climate litigation | climate litigation]] targeting fossil fuel producers. Critics, including many in the U.S. market, contend that exclusions reduce competition, raise costs for energy consumers, and may amount to politically motivated decisions that fall outside an insurer's [[Definition:Fiduciary duty | fiduciary]] obligations. Regulatory responses have diverged sharply: several U.S. states have introduced or enacted [[Definition:Anti-ESG legislation | anti-boycott]] legislation targeting insurers that restrict fossil fuel coverage, while European regulators under [[Definition:Solvency II | Solvency II]] increasingly expect climate-related risk factors to be embedded in [[Definition:Own risk and solvency assessment (ORSA) | ORSA]] processes. The result is a fragmented global landscape in which fossil fuel exclusions reflect not just underwriting judgment but also the broader geopolitical and regulatory environment in which each insurer operates.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Environmental, social, and governance (ESG)]]
* [[Definition:Climate risk]]
* [[Definition:Stranded asset risk]]
* [[Definition:Underwriting guidelines]]
* [[Definition:Climate litigation]]
* [[Definition:Net-Zero Insurance Alliance (NZIA)]]
{{Div col end}}

Definition:Fossil fuel exclusion - Revision history

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