Tokio Marine Kiln (TMK), a prominent global insurance company, has revealed a new collaboration with carbon credit insurance company Kita.
This new partnership aims to offer political risk insurance to support both developers and investors involved in CO2 credit projects.
In the realm of carbon credit projects, navigating through the various risks can be challenging. With more companies and governments focusing on reducing emissions, there is a growing demand for innovative insurance products to support these initiatives.
Due to the growing instability in political climates around the world, carbon credit projects are facing higher levels of vulnerability from geopolitical changes that affect their capacity to sell credits. The new insurance developed by TMK and Kita aims to reduce these changing risks, offering essential assurance for investors and fostering trust in the voluntary carbon market.
The insurance will protect project developers and their investors from risks such as expropriation, governmental takeover, mandatory abandonment, license revocation, and political unrest. It will also provide compensation for both the developers and investors in case the host country of a project nullifies agreements that allow credits to be used for external offsetting plans.
The presence of insurance coverage will enhance the feasibility of new initiatives and will allow ambitious, high-quality projects to move forward, with the thorough evaluation from Kita and TMK offering extra assurance to investors.
Kita’s Head of Insurance, James Kench, explained that the new Carbon Political Risk Cover, developed in partnership with TMK, offers protection against typical political risks and contract issues, along with customized coverage for carbon delivery failures.
He shared that if, for instance, a host country were to withdraw a project’s Article 6 authorization or not carry out an agreed adjustment, the insurance would cover expenses and prevent any significant financial consequences that could impede the project’s advancement and prosperity.
The collaboration between TMK and Kita marks a substantial advancement in the realm of climate finance and is already driving transformation in the industry, with TMK poised to be among the early adopters of this kind of policy in the Lloyd’s insurance market.
source: carbon herald
Comments