Insurers' Underwriting Policies

Underwriting policies have become an increasingly important tool through which insurers manage reputational risks. We study the design, determinants, implementation, and real effects of such policies in the context of coal projects. Coal underwriting policies are more common among insurers from countries with stronger climate policies and less common among specialty and unlisted insurers. Policy-adopting insurers reduce coverage of U.S. coal mines, but implementation is incomplete and heterogeneous. Other insurers replace withdrawn coverage only partly. Because insurance is legally required to operate, affected mines become more likely to be abandoned. An insurance-supply model rationalizes these patterns.