Only one major insurer has committed to restricting liquefied natural gas (LNG) expansion within the Coral Triangle, leaving the world’s most biodiverse marine ecosystem exposed to dozens of planned fossil fuel projects. Despite pressure from the NGO coalition Insure Our Future, 29 of the 30 global insurers approached have declined to implement specific underwriting protections for the region, which supports over 360 million people.
Why is the Coral Triangle at risk from LNG development?
The Coral Triangle spans Indonesia, Malaysia, Papua New Guinea, the Philippines, Solomon Islands, and Timor-Leste, hosting 76% of all known coral species. According to the coalition Insure Our Future, there are at least 27 new LNG terminals planned for the region, adding to the 19 already in operation. Many of these sites are situated directly adjacent to fragile mangroves, coral reefs, and seagrass beds. Environmental advocates warn that these projects threaten to disrupt essential coastal protection services and regional food security.
The Coral Triangle provides natural storm protection and economic resources for over 360 million people. It is widely considered the “nursery of the seas” due to its high concentration of reef fish and coral diversity.
How are insurers responding to biodiversity demands?
France’s Scor is currently the only insurer to introduce new restrictions on LNG expansion in the Coral Triangle following engagement with NGOs. Other major firms, including Allianz, Aviva, AXA, Generali, Hannover Re, Talanx, MS&AD, Munich Re, Sompo, Swiss Re, and Tokio Marine, responded to inquiries but ultimately declined to adopt dedicated policies for the region. Meanwhile, firms such as Berkshire Hathaway, Chubb, Travelers, Zurich, and Lloyd’s either provided no response or refused to engage on the issue, as reported by Insure Our Future.
What are the financial risks of stranded assets in Asia?
Analysts warn that new gas infrastructure in Asia faces a high risk of becoming “stranded assets” as renewable energy becomes more cost-competitive. Christopher Doleman, an Asia gas specialist at the Institute for Energy Economics and Financial Analysis (IEEFA), notes that solar power paired with battery storage is increasingly undercutting the price of LNG. The International Energy Agency (IEA) has cautioned that up to 75% of current LNG projects may fail to recover their initial capital investment under a 1.5°C-aligned climate scenario.
Monitor the IEEFA’s regular updates on energy transition economics. Understanding the “levelized cost of energy” (LCOE) for renewables versus gas is essential for assessing the long-term viability of infrastructure investments in emerging markets.
How do climate-related physical risks impact infrastructure?
LNG infrastructure in Southeast Asia faces significant exposure to intensified typhoons, storm surges, and coastal flooding. According to data from the IEEFA, nearly 90% of planned floating LNG terminals in the Philippines and Vietnam are located in areas highly vulnerable to extreme weather events. These physical risks present a direct challenge to the insurability of such projects, yet most underwriters continue to support the expansion despite the potential for massive climate-driven losses.
Frequently Asked Questions
- Which insurer has restricted LNG expansion in the Coral Triangle?
Scor is the only insurer among the 30 contacted by the Insure Our Future coalition to have introduced specific restrictions for the area. - Why is the Coral Triangle important?
It is home to 76% of global coral species and provides critical economic and environmental support for over 360 million people in the Asia-Pacific region. - What is a stranded asset in the energy sector?
A stranded asset is an investment, such as a gas terminal, that loses its value or becomes a liability before the end of its expected economic life due to market shifts or climate regulations. - Are renewables cheaper than LNG in Asia?
According to IEEFA, solar energy combined with battery storage is now providing firm power at rates that often undercut the costs associated with new LNG infrastructure.
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