Nippon Life Insurance Co. will halt funding for new coal-fired power generation in another sign Japanese financial institutions are curbing support for one of the planet’s most polluting fuels.

The Japanese insurer, which in April was mulling ending new loans and investments in ventures that contribute to climate change, said July 13 the updated policy reflects the global impact from coal-fired generation. Rival Dai-Ichi Life Insurance Co. said in May it wouldn’t provide financing for overseas projects...