Howden launches Carbon Credits Warranty and Indemnity Policy to Enhance Trust and Quality

Howden Launches Carbon Credits Warranty and Indemnity Policy

Global insurance intermediary group Howden has made a groundbreaking move in the voluntary carbon market by placing the first Carbon Credits Warranty and Indemnity (W&I) insurance policy. This policy provides cover for the sale of carbon credits generated by Mere Plantations’ reafforestation project in Ghana, West Africa.

Mere Plantations, headquartered in the UK, owns and operates a teak plantation in Ghana and has been underwritten by a leading managing general agent (MGA). The introduction of the W&I policy aims to enhance the trust and perceived quality of carbon credits in the market.

The Carbon Credits W&I policy is designed to catalyze investment in the carbon market by ensuring the integrity and value of the credits. With this policy, Mere Plantations can assure buyers that their credits meet the required standards of environmental, social, and financial due diligence, and that their provenance is insured.

In addition, the policy allows project developers to leverage the expertise of the merger and acquisition insurance market, providing confidence in the methodology and execution of carbon credit projects. Buyers are willing to pay a premium for these high-quality credits, with British logistics company Uniserve being the first buyer.

Uniserve group chief commercial and operating officer Gary Cobbing expressed confidence in the partnership, stating that the transparency and assurance provided by the insurance policy boost their confidence in the carbon market. Howden’s previous ventures in the carbon market include the launch of the first voluntary carbon credit insurance product in 2022 and the introduction of an insurance product in January 2024 that covers carbon dioxide leakage from carbon capture and storage facilities.

Howden Carbon Insurance head Charlie Pool emphasized the importance of insurance in guaranteeing the credibility of carbon credits. He stated that this innovative policy will ensure that credits attract a higher value and encourage further project development. By addressing the lack of trust and transparency in the market, this policy represents a significant step forward for clients.

Overall, the introduction of the Carbon Credits Warranty and Indemnity policy by Howden marks a significant development in the voluntary carbon market. It not only enhances the trust and perceived quality of carbon credits but also provides assurance to buyers and project developers, ultimately driving investment and growth in the carbon market.