Insurers are facing growing pressure to do more to help curb global warming in the wake of last week’s grim report by the United Nations Intergovernmental Panel on Climate Change (IPCC).

The report contains a stark warning that current measures to halt man-made carbon pollution have not been sufficient. Now insurers are being called on to move away from insuring and investing in coal-based power generation and coal mining.

The Australasian Centre for Corporate Responsibility says the clearest recommendation coming from the report is the need to reduce and then eliminate the use of coal.

Director of Climate and Environment Daniel Gocher told insuranceNEWS.com.au today that “essentially, developed countries should be looking to transition away from coal by 2030 and then completely out of it by 2050”.

“We bite the bullet and transition the economy at some expense, or we wear the cost of climate impact, which is where the insurance angle comes in.”

He says insurers can play a critical role by pulling the plug on coal-related businesses and investments.

While some European insurers such as Allianz and Swiss Re have already stopped insuring single coal-fired power plants and coalmines in operation or planning, the response from the rest of the industry has been less forceful.

Among Australia’s major insurers, IAG has released a climate action plan that also ties senior managers’ performances to how well they manage financial risks linked to climate change. Suncorp has also released a climate change action plan intended to strengthen its resilience and reduce carbon emissions across the value chain.

“The IPCC has certainly elevated the urgency of the need to take action,” Mr Gocher said.

“It’s our view that what this report has done is given activists like ourselves and progressive companies the impetus to speak out for the need to take action.”

Local natural hazards research centre Risk Frontiers – which has strong links to the insurance industry – says the world is “reaching the point of no return” and urges Australian policymakers to heed the IPCC report’s message.

“The report has divided opinion in Australia and further highlights the polarising power of climate change across government, academia and industry,” the centre’s Risk Scientist Thomas Mortlock said.

“It has exposed an interesting divide between sectors that have come to the fore in recent years – with banking, insurance and industry at large leading the charge in understanding climate change risk and exposures, and the Federal Government lagging.”

Meanwhile, the Bank of England’s Prudential Regulation Authority (PRA) has issued a consultation paper setting out proposed expectations about insurers’ and banks’ approaches to managing financial risks from climate change.

The paper contains proposals that include holding board-level executives responsible for managing climate change risks and developing an approach to disclosure on these risks.

“Climate change and society’s response to it presents financial risks that are relevant to the PRA’s objectives of safety and soundness,” the Bank of England says.

“While these risks may crystallise in full over longer-time horizons, they are becoming apparent now.”