CFC, the specialist insurance provider, pioneer in emerging risk and market leader in cyber, has today announced its entry in the carbon insurance market with the launch of a groundbreaking new product.
CFC’s innovative new Carbon Delivery Insurance is the first to cover both the physical and political risks faced by businesses purchasing voluntary carbon credits on a forward basis. Carbon Delivery Insurance covers 100% of the purchaser’s investment for non-delivery of carbon credits.
And in another first, CFC has built a sophisticated underwriting model that rates the carbon project itself rather than the policyholder. This makes the product easy to buy, and negates the need for lengthy, complex application forms and protracted discussions that take weeks to result in a quote. Rather, CFC can deliver same day quoting and binding for a buyer purchasing from one of over 300 carbon projects and counting.
To understand the increasing demand among leading market participants for carbon insurance to help mitigate the risks of the voluntary carbon market (VCM), CFC surveyed over 500 companies actively involved in the market:
- 75% of existing buyers are ‘very concerned’ about delivery shortfalls
- 65% have experienced losses from non-delivery
- 80% said they are very like to consider purchasing under-delivery insurance
- 50% of non-buyers said they would be more inclined to purchase voluntary carbon credits if they could insure them against non-delivery risk
“Insurance is the mechanism by which all parties involved in the voluntary carbon market can collaborate in their decarbonisation projects with full accountability. By facilitating risk transfer, we believe that insurers can drive positive change while getting ahead in a market whose value could exceed $1 trillion by 2050,” said George Beattie, Head of Innovation at CFC. “The introduction of our Carbon Delivery Insurance product represents a further step forward by the industry to protect buyers and galvanise quality growth in this market, empowering market participants to overcome its inherent risks.”
“Following 12 months’ intensive research and consultation to ensure we’re delivering a product that provides the peace of mind that the voluntary carbon market is looking for, our Carbon Delivery Insurance proposition marks our first step into the multi-faceted carbon market,” added Beattie. “To facilitate investment and encourage liquidity across the voluntary carbon market, we already have a number of other products in development to meet the needs of different parts of the carbon value chain.”
CFC has produced an in-depth report “An unmissable opportunity in the carbon market” providing further details on how the VCM works, the challenges it faces and why the insurance industry’s involvement is key to driving its growth and sustainability.
The report also includes full details of the results of CFC’s survey of 549 wholesalers, investors, corporate buyers and project developers spanning every industry in the UK, the US and Canada whose organisations already operate in the VCM.
Read more about CFC’s ground-breaking Carbon Delivery Insurance product here.
