The global insurance intermediary group Howden launched a first-of-its-kind Carbon Credit Warranty and Indemnity (W&I) insurance policy. This W&I policy is aimed to provide insurance cover on the sale of carbon credits for the reforestation project of degraded forest lands by the UK-based company Mere Plantations.
Introducing a Carbon Credits Warranty & Indemnity (W&I) policy significantly enhances trust in the quality of carbon credits, potentially unlocking a wave of capital into the carbon market. This policy acts as a governance mechanism, ensuring the integrity and value of the credits.
This insurance policy allows project developers to leverage the underwriting expertise of the M&A insurance market, providing confidence in the methodology and implementation of their carbon credit projects. As a result, buyers recognise the value of this protection and the high quality of the credits, leading to purchases at a premium compared to other reforestation projects in the market. Uniserve, a UK-based logistics company, is the first to buy these credits.
Charlie Pool, Head of Carbon Insurance, Howden, said, “The carbon markets are the best tool for putting a price on emissions. Traditionally held back by poor governance, the voluntary market can now be improved using market-based mechanisms. With insurance guaranteeing the credibility of carbon credits, this product will ensure credits attract a higher value and encourage further project development. By addressing the lack of trust and transparency, this innovative policy introduces a much-needed structural improvement and represents a significant step forward on behalf of clients.”
