Environmental activists have urged the insurance industry and governments to snub plans to establish a mutual to provide cover for the Australian coal industry and its service providers.

A parliamentary inquiry into the prudential regulation of investment in Australia’s export industries has heard how difficult it is for the fossil fuel industry to get insurance, with underwriters increasingly pulling back from these types of risk.

Media reports today, citing industry sources, say that coal mining companies are now pushing forward with the mutual plan, sparking a strong reaction from environmental groups Market Forces and #StopAdani.

“As the latest Intergovernmental Panel on Climate Change (IPCC) report clearly outlines, coal needs to be urgently phased out in order to limit catastrophic global warming as much as possible,” Market Forces campaigner Pablo Brait said.

“But coal mining companies are desperately trying to find new ways to manage risk, now that major insurers are beginning to exit the coal insurance business.

“If this proposed Australian coal mining insurance fund is established, it will only serve to delay the transition to clean energy and deepen the climate crisis.

“This proposed Australian coal mining insurance fund will need investment, public funds, and reinsurance to succeed.

“All reinsurers, insurance brokers, and governments that claim to take the climate crisis seriously must reject any collaboration with this dangerous scheme.”

As insuranceNEWS.com.au has reported, mutual designer Picnic Labs has been consulting on the possibility of a setting up a scheme for small business service providers to the resources sector.

CEO Charles Pollack told insuranceNEWS.com.au today that exploratory work in relation to small business customers’ needs has been completed and it is ready to take the idea "to the next stage, which would be to gather data and the preparation of a business plan to validate feasibility”.

Underwriters’ withdrawal from the coal industry is “ESG -driven”, he says ­– referring to insurers’ Environmental, Social and Governance policies.

“It’s nothing to do with the risk, and it’s very insurable,” he said. “This means a mutual could work and it’s one of the best examples of a community coming together to protect its interests.”

Asked about climate concerns and any possible negative reaction to Picnic’s involvement, Mr Pollack says “we don’t believe it is a reason for the industry not to do it”.

He compares Picnic to a boatbuilder and says if a party approaches Picnic requesting assistance then they are likely to engage.

“We just build the boat and put it in the water,” he said.

He also says service companies might only do 10% of their work with the fossil fuel industry but some are unable to get insurance for the entirety of their operations at the moment.

“It is now about engaging with select groups to really drive this forwards,” he said.