The global insurance industry is expected to be worth $8.21 trillion this year, and while it has grown, the sector is known to be risk-averse and slow to change. Given the nature of insurance, a Japanese insurer's new, bold $1 billion move toward a low-carbon future is a shocking and well-timed step toward decarbonization.
Japan's largest property and casualty insurer, Tokio Marine, has launched a business unit dedicated to covering the risks of low-carbon industries. The group, Tokio Marine GX, will specialize in underwriting emerging green technologies and transition-linked ventures, from hydrogen and fuel cells to electric vehicles and floating solar, while targeting $1 billion in revenue by 2030.
"We're going to rip up the rule-card a little bit here," Fraser McLachlan, chair of TMGX, told Reuters. "We're going to look at some new technologies, we're going to look at more sophisticated ways of being able to risk transfer business."
As the world pushes toward a just, low-carbon future, financing the risks associated with clean infrastructure has proved to be a critical barrier. By reducing risk for lenders through services such as tax credit insurance and surety guarantees, TMGX will help make green projects more attractive to investors, banks, and entrepreneurs.
At scale, this kind of insurance unit could create new green jobs, stimulate regional economies, and fuel long-term growth. Green businesses have already shown they outperform fossil fuel stocks, and this new venture continues investment in green infrastructure.
TMGX's launch comes at a tumultuous time for the insurance industry, with rate hikes prevalent and companies abandoning disaster zones. This volatility has left many businesses searching for stability. TMGX offers a different model — one focused on de-risking the clean energy transition rather than backing away from it.
"Exciting update. Your commitment to improving the present and leading into the future is admirable!" one user commented on a LinkedIn post announcing TMGX's move.
TMGX is getting a head start with 50 staff and $200 million in revenue from its GCube renewable energy team and plans to offer up to $500 million in coverage on any single risk.
"There's a lot of sectors that really haven't been served by the insurance space," McLachlan said in a news release. "Together, we will unlock new commercial opportunities while creating a greener, more resilient world for tomorrow."
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