-- As the market for in-house insurance surpasses a record $200 billion, the underlying reasons for that boom show how a hotter, less stable planet is redrawing the risk map for corporations.Hong Kong’s Arts Hub Turns to Selling Land to Stay Afloat
It’s the latest sign that climate change is upending the norms that underpin how markets function, as the economic cost of covering its fallout balloons. A recent report by Aon noted that the market for captive insurance has grown “significantly” over the past few years, with roughly a quarter of the almost 3,000 companies it surveyed saying they’ve resorted to such arrangements. In 2021, the figure was 17%.
That’s as extreme weather pushes mainstream insurers from the US to Europe to raise prices to levels that make their services increasingly inaccessible. Sectors affected by the development span utilities to operators of renewable-energy farms. BHP Group Ltd., TotalEnergies SE, Enel SpA, BP Plc, Glencore Plc and Shell Plc have all created in-house entities to cover their risk, according to company filings. Other commodity companies now relying on the captives market include Thungela Resources Ltd., the spinoff from Anglo American Plc. Australian coal producer Whitehaven Coal Ltd. has said it’s in the process of setting one up.
Captives are a “shadow part of the insurance industry” that enables the continued underwriting of polluting assets, he said. Ultimately, the development could delay the green-energy transition, he said. “There’s a period of time that one needs to phase this stuff out,” English said. The question then becomes, “what does that phasing look like?”Egypt's Sisi heads for Turkey in first presidential visit in 12 years