It’s time for Lloyd’s to engage in an open dialogue about its policies and end insurance and investments in fossil fuel projects.
Insurance companies have warned about growing climate risks for more than two decades.
They are now footing the bill for ever-increasing damages from floods, hurricanes, wildfires and other climate disasters. But without insurance, the most carbon-intensive fossil fuel projects driving the climate crisis cannot function.
In an act of enlightened self-interest, 19 insurance companies – including some of the world’s largest insurers and reinsurers – have ended or limited their services for the coal industry, and eight have done the same for tar sands projects.
Their withdrawal has caused rising fees and lengthening delays for numerous fossil fuel projects.
Lloyd’s of London, which is credited with having invented the concept of insurance in a coffee house in 1686, is the only major European insurer which has not committed to stop providing coverage for any fossil fuel projects.
According to insurance broker Willis Towers Watson, Lloyd’s controls 23 percent of the insurance market for new energy projects. The specialty insurers of the Lloyd’s market take pride in insuring what no-one else will – from footballers’ legs, to climate-wrecking fossil fuel projects which other insurers dare not touch.
Cutting across First Nations territories and a National Park, Canada's Trans Mountain pipeline carries oil from the Alberta tar fields to the Pacific Ocean. Tar sands are the most polluting source of oil, yet the pipeline’s capacity is currently being expanded from 300,000 to 890,000 barrels per day.
In 2018, the Canadian government had to step in to bail out the $4.5 billion project, when private developer Kinder Morgan withdrew due to the ongoing protests and legal challenges. But now insurers’ support for the pipeline is crumbling.
In line with their commitments to climate action, three major insurance providers – Zurich, Munich Re and Talanx – recently decided to end their cover for the Trans Mountain pipeline.
And so the spotlight turns to Lloyd’s. Covering $460 million of the project, Lloyd’s has been the biggest insurer of the Trans Mountain pipeline to date.
On 1st September – the very day that Trans Mountain’s insurance certificate is due for renewal – Lloyd's underwriters will return to their iconic City of London underwriting room, knowing that they are undermining the climate efforts of other insurers, global activists and Indigenous peoples.
And Trans Mountain is not the only carbon bomb in the Lloyd’s portfolio.
The insurer has admitted to the Insure Our Future campaign that it is also involved in the Adani Group’s Carmichael coal mine in Australia – a giant project which has so far been shunned by more than 70 financial institutions, including 18 other insurers.
If allowed to operate, it is estimated the mine will add 4.6 billion tonnes of carbon pollution to the atmosphere and will suck out at least 270 billion litres of groundwater over the life of the mine.
When challenged about Lloyd’s role in underwriting fossil fuel projects, CEO John Neal stated last October that “only in exceptional circumstances will we direct the [Lloyd’s] market not to write a certain kind of business.” Lloyd’s management offices must be one of the rare places where the looming climate breakdown isn’t considered “exceptional circumstances”.
In 2017, the UK government founded the Powering Past Coal Alliance. The Mayor of London has published a bold Climate Action Plan which aims to make the city compatible with the Paris Agreement goal of limiting global warming to 1.5C.
Banks like the Royal Bank of Scotland, pension funds like Nest, and insurance companies like Legal & General have all adopted ambitious commitments to transition away from fossil fuels. By filling the gap which other insurers have left, Lloyd’s is undermining the positive steps that climate leaders have taken.
It’s time for Lloyd’s to engage in an open dialogue about its policies, end insurance and investments in fossil fuel projects and companies not in line with the Paris Agreement – and stop burying its head in the sand.
Lindsay Keenan is the European co-ordinator of the Insure Our Future campaign.