CFC announces entry into carbon insurance market

Specialist insurance provider CFC is entering the carbon insurance market with the launch of a new product.

Called Carbon Delivery Insurance, the proposition covers both the physical and political risks faced by businesses purchasing voluntary carbon credits on a forward basis.

It also covers all of the purchaser’s investment for non-delivery of carbon credits.

And as part of the offering, CFC has built an underwriting model that rates carbon projects itself rather than the policyholder.

This means the firm can deliver same day quoting and binding for a buyer purchasing from one of over 300 carbon projects.

The product will be launched through CFC’s broker distribution channel.

“Insurance is the mechanism by which all parties involved in the voluntary carbon market can collaborate in their decarbonisation projects with full accountability,” George Beattie, head of innovation at CFC, said.

“By facilitating risk transfer, we believe that insurers can drive positive change while getting ahead in a market whose value could exceed $1trn by 2050.

“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.”

Partnership

To help with the distribution of the product, CFC has also partnered with carbon innovation platform IncubEx.

The partnership aims to make the product more available to specialist brokers and deliver application programming interface (API)-based distribution of CFC’s carbon insurance products within trading venues.

Neil Eckert, chairman at IncubEx, said: “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 that 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.”