Axis has withdrawn its quotes for insurance of the mine's railway, the source told Reuters.
The insurer will publish a formal policy to cut its exposure to coal more broadly in the weeks ahead, the source added.
Axis joins a growing list of global insurers to refuse to insure the project, which received the green light from Canberra in June despite fierce opposition from environmental groups.
The Queensland-based Carmichael mine is expected to chalk up annual production of 8 million to 10 million tonnes of thermal coal, responsible for a large slice of the world's carbon emissions.
As a result, 14 large insurers including AXA, Allianz, Liberty Mutual Insurance Co, Munich Re, Swiss Re and local market leader QBE Insurance Group Ltd have already confirmed they will not insure Carmichael, according to lobby group Market Forces.
Sixteen insurers including Chubb Ltd, Australia's QBE and Suncorp Group Ltd and European insurers Allianz and Zurich Insurance Group have already adopted policies to cut their exposure to coal projects, according to lobby group Unfriend Coal.
(Reporting by Suzanne Barlyn, Simon Jessop and Carolyn Cohn; Editing by Lisa Shumaker)