Self-insurance by the government for the expansion would cost taxpayers C$1.1 billion, the groups said.

Pressure is growing for financial companies to pull back from insuring and investing in polluting industries like coal and oil as part of an effort to combat climate change.

The coalition sent a letter to 27 companies registered to insure the pipeline, including Munich RE [MUVGGR.UL], Talanx and Zurich Insurance Group, asking them to drop their coverage before Aug. 31, the deadline for Canada to renew its liability insurance.

The groups said they hope the pressure "will show the Canadian government that the expansion is uninsurable."

The Canadian government bought the pipeline from Kinder Morgan to help clear crude transportation bottlenecks for landlocked Alberta crude. Environmental activists say the project will undermine Canada's commitment to reduce greenhouse gas emissions 70% below 2005 levels by 2030 under the Paris climate agreement.

"Providing insurance services to a project that would allow exponential growth of the oil sands, effectively removing any remaining chance of Canada staying within the goals of the Paris climate change agreement, would critically undermine the continued viability of your industry," the groups told the insurers in the joint letter.

The activist groups include Stand.Earth, the Union of BC Indian Chiefs, German NGO Urgewald, the Rainforest Action Network and Greenpeace International.

Last month Chubb Ltd became the first U.S. insurer to say it would no longer sell policies to or invest in companies that make more than 30% of their revenue from coal mining. This follows the lead of some of Europe's biggest insurers and financial institutions, including Allianz Finance Corp [ALVGLZ.UL], AXA [AXAFD.UL], Lloyds Banking Group and Zurich Insurance Group, which have placed restrictions on coal underwriting.

The groups said they would ramp up pressure on Zurich, which told the campaigners in a letter last week it would continue insuring the Trans Mountain Pipeline while it discusses with the Canadian government how to meet its Paris climate agreement targets with the pipeline in place.

In June, Zurich had pledged to begin to divest from the oil sands industry, starting with dialogue about transition plans with their customers that have over 30% exposure to thermal coal, oil sands and oil shales.

"By renewing coverage of the Trans Mountain Pipeline, Zurich betrays its own commitments," Lucie Pinson, of the Unfriend Coal campaign, said in a statement on Thursday.

Pavel Osipyants, a spokesman for Zurich, said insuring the pipeline does not betray its pledge because Zurich "will either facilitate a transition to an alternative insurer (stop insuring them) or continue to provide insurance coverage" for the pipeline company depending what it learns about its strategy and position on climate change risk after their dialogue.

(Reporting by Valerie Volcovici; Editing by Richard Chang and Dan Grebler)

By Valerie Volcovici