Axa XL's Gosselin: Insurance best plays in the ‘shades in-between’ green and brown energy

By Rebecca Delaney

July 3 - (The Insurer) - The insurance sector has a responsibility to continue to underwrite fossil fuel infrastructure to support continued energy security while also promoting long-term resilience and sustainability, Axa XL’s Mike Gosselin said on Thursday.

Gosselin, who serves as chief underwriting officer for UK and Lloyd’s at Axa XL, also welcomed the accountability that climate activists impose onto the sector as he delivered a keynote address at Energy Insurance London on Thursday, where he underlined the current inflection point of the global energy system.

“Demand is rising, populations are growing, and the call for decarbonisation is getting louder,” he said.

“But, let's be honest, the transition is not simple. It's messy, it's uneven, politically charged over the last six months and, too often, it stalls not because of lack of will, but because of lack of confidence. The true value of insurance, and how it always has been, is confidence.”

Gosselin also underlined the need for the insurers to underwrite the transition as a transformative process across the global energy mix, rather than solely focusing on the end state of low-carbon energy.

“Let's be clear. Fossil fuels aren't disappearing overnight. Today, more than 70% of the world's energy still comes from hydrocarbons. The companies operating in that space are the very ones investing heavily in decarbonisation,” he said.

“We don't believe in binary classifications of green or brown. We think the real work happens in the shades in-between. That's where the insurance industry's future does lie. It's not about choosing between the old and the new, it's about bridging them responsibly.”

Gosselin continued that, as well as promising to pay out claims and pricing long-tail risk into long-term energy infrastructure, insurers must look to prevent losses in the first place by promoting climate resilience measures and supporting long-term planning among clients.

“It's more than just that one-year view that we have to take. We must go from payout to partnership, and imagine a world where insurance actually rewards things like transition planning, climate-positive operations and predictive risk monitoring powered by AI and satellite tech.”

Gosselin added that this presents a particular opportunity for the London market, similar to the innovation applied to previous iterations of cutting-edge energy infrastructure.

“Let's apply the same urgency we had the underwriting of the North Sea in the 1980s, LNG in the 2000s, to climate tech in the 2020s,” he said.

“Ultimately, we led that charge. We made it happen. To my fellow underwriters, this is more than technical pricing. This is strategic capital deployment that we're looking at in the future.”

PROTESTORS ‘KEEPING US RESPONSIBLE’

Delegates for the London event were met outside the venue by a contingent from the Insure Our Survival campaign.

The activists called on the insurance industry to cease providing coverage to the expansion of coal, oil and gas infrastructure, in particular calling out alleged industry involvement with the East Africa Crude Oil Pipeline.

The Insure Our Survival campaign was launched by Extinction Rebellion in October last year to coordinate a series of nonviolent direct actions targeting insurers.

Gosselin welcomed the “passion” of the protestors, underlining the overarching shared aim of climate activists and renewable energy underwriters to responsibly increase the pace of the transition.

“I like the protesters. They have passion, they know we want a better world to live in,” he said.

“We should be proud that we provide the world with energy and fuel, and it feeds everything that we have around us. I think what they're doing is keeping us responsible for basically playing that role and actually moving things forward.”

Gosselin added: “Everyone has a different view. I think we need to hear everyone in this conversation and get to know what they're thinking as well as what we are.”