Innovative new approach aimed to protect buyers and galvanise quality growth in the voluntary carbon market
LONDON, March 19, 2024 /PRNewswire/ -- 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."
In addition to launching Carbon Delivery Insurance through its traditional broker distribution channel, CFC has also partnered with IncubEx - a fast-growing carbon innovation platform at the cutting edge of the voluntary carbon market. The partnership aims to develop the insurance sector's role in the market, deliver API-based distribution of CFC's carbon insurance products within trading venues such as Incubex' TVCM carbon trading platform, and facilitate introduction to specialist insurance brokers who will ultimately execute every deal.
Neil Eckert, Chairman at IncubEx, added: "IncubEx recognises the role that the insurance markets have to play to take the carbon markets to scale. We have been delighted to support insurers in the market, such as CFC, who demonstrate the willingness and leadership to develop new products which will either protect and scale investments in nature and biodiversity, or will support the removal of carbon to tackle climate risk. CFC has a strong track record of innovation, underwriting expertise and distribution partnerships and will be a very welcome addition to the industry's offerings to take the carbon market to scale."
"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.
Watch this video to hear George Beattie talk more about the role of insurance in the voluntary carbon market alongside Incubex Managing Director, Ian Meadows.
About CFC
CFC is a specialist insurance provider, pioneer in emerging risk and market leader in cyber. Our global insurance platform uses cutting-edge technology and data science to deliver smarter, faster underwriting and protect customers from today's most critical business risks.
Headquartered in London with offices in New York, San Francisco, Austin, Brussels and Brisbane, CFC has over 875 employees and is trusted by more than 150,000 businesses in 90 countries. Learn more at cfc.com and LinkedIn.
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