Although the impact of carbon emissions on climate is a major concern for carriers, western Canadian brokers are concerned about efforts to reduce Canada’s reliance on oil and gas.
“Oil and gas is not going away any time soon, and if we are going to reduce our reliance on it, then let’s do it slowly and in conjunction with other methods [of reducing carbon emissions],” said Clint Smith, chief operating officer of Virden, Man.-based Andrew Agencies Ltd.
“We have got to come to a realization that we are going to have to work together to address climate change over time, because if we chop off the head of oil, it is going to have a huge impact, especially on the western economy. I don’t think the East understands how much impact it’s going to have on the entire country,” Smith said in a recent interview.
He was asked about insurers withdrawing coverage from Canadian oil-related projects.
Smith made his comment during the recent Insurance Brokers Association of Ontario convention. During the CEO panel, audience members heard that between 5% and 7% of small business in Canada could disappear following a second wave of COVID-19.
“It is concerning, especially out here in Western Canada. A predominant industry out here is oil and gas, which has really been impacted significantly, especially in the last couple of years. That has had an impact not only in Alberta, but in Saskatchewan and Manitoba as well,” said Smith.
Andrew Agencies has 20 brokerage offices in Alberta, Saskatchewan and Manitoba.
In a recent interview, Smith was asked about his brokerage’s digital strategy, as well as the response to the COVID-19 pandemic and the challenges facing brokers in Western Canada.
Canada’s oil sands account for about a tenth of 1% of global greenhouse gas emissions, Natural Resources Canada reports. But the oil and gas industry has come under fire recently from several global insurers.
Bermuda-based Axis Capital Holdings Ltd. announced in 2019 it will stop writing new insurance and facultative reinsurance for oil sands extraction and pipeline projects. Then in July 2020, Reuters reported that Zurich has decided not to renew cover for the Trans Mountain oil pipeline.
The Trans Mountain, which is now owned by the federal government, was built in 1953. The federal government has approved a twinning project. If completed, the expansion would essentially triple the capacity from 300,000 to nearly 900,000 barrels a day.
In an interview, Smith was asked about insurers who say they will not be covering the Trans Mountain pipeline because of the perception that pipelines contribute to climate change and property losses due to severe weather.
“There are so many ways to look at it,” said Smith. “For example, you can look at the carbon footprint that will be created through transportation of oil and gas through railway, and you look at the carbon footprint of mining for materials for batteries for electric cars. It is so hard for the individual person to even grasp what’s right and what’s wrong.
“Our oil and gas companies out here are working very hard to try to make sure that they are doing the right things. If anyone in the world is going to produce oil and gas, then Canada should be one of the last countries that is left doing it, because we are doing it the right way.”