Tokio Marine Kiln unveils political risk coverage with Kita

This makes the insurer amongst the first to offer this type of policy on the Lloyd’s market.

Tokio Marine Kiln (TMK) is collaborating with Kita, a carbon credit insurance firm, to provide political risk insurance for developers of, and investors in, carbon credits projects.

TMK said in a press release that this makes the insurer amongst the first to offer this type of policy in the Lloyd’s market.

The new coverage will allow these projects to reduce the financial risk of political instability to their ability to sell and export credits.

Led by Ed Parker, head of special risks at TMK, the new insurance product addresses the growing geopolitical uncertainties affecting carbon credit projects globally. 

“We are at a critical juncture when it comes to offsetting strategies. They could not be more vital as the world tries to move at pace towards net zero, but increasing political instability is impacting projects designed to produce carbon credits,” Parker said in a joint media release. 

“This issue is even more pertinent now as so many industries are facing increasing regulation around their offsetting and developers simply cannot afford to keep investing in the creation and maintenance of projects if they won’t be able to sell the credits when they are revoked,” he added.

It provides coverage for losses arising from host countries altering agreements crucial for carbon credit eligibility under external offsetting strategies.

By mitigating risks associated with political instability, the partnership between TMK and Kita aims to facilitate the viability and sustainability of new carbon projects.

James Kench, Head of Insurance at Kita, emphasised the importance of Political Risk insurance in catalysing investment in high-quality carbon projects. The collaboration with TMK will enable the provision of essential protection against politic

“Political Risk insurance has the potential to significantly mitigate the risks associated with correspondingly adjusted credits and protect anyone investing or operating in politically uncertain environments,” Kench also said in the joint press release.

“For example, should a host country either revoke a project’s Article 6 authorisation or fail to apply a corresponding adjustment as promised, insurance would cover the costs and prevent wider financial impact that may inhibit progression of the project and its success,” Kench added.