Chaucer announces new partnership with Kita

Global specialty (re)insurance group Chaucer is working with carbon credit insurance specialist Kita to bring its insurance products to the carbon markets.

Kita’s first product, Carbon Purchase Protection Cover, insures the buyer of forward purchased carbon credits against delivery risk, removing a significant protection gap.

Chaucer is investing in Kita as well as providing lead underwriting capacity; follow capacity will be provided by Munich Re Syndicate and RenaissanceRe.

Kita was approved as a Lloyd’s coverholder in December 2022.

Founded in 2021, Kita (a team of ~28) protects carbon credit buyers against the risk of carbon sequestration projects failing to deliver expected volumes of high-quality carbon credits. For example, a company with a high-integrity net zero strategy might forward purchase carbon removal credits in an afforestation carbon project, with the aim of enabling an environment in which young trees can grow, capturing carbon and generating biodiversity benefits. Carbon Purchase Protection Cover protects against the risk that the afforestation project doesn’t generate verified high-quality carbon credits, due to avoidable and unavoidable loss, as well as fraud.

Examples of a valid claim – the forest developer contracted by the landowner mis-managed their financial commitments to purchase sufficient sapling stock for a forest creation scheme. As a result, the landowner was forced to contract with a new developer to take-over the forest management. This change of developer led to a lower-than-expected carbon yield in year 6 of the project resulting in a claim.