With Lloyd\u2019s AGM opening tomorrow, now is the time to take a closer look at where the (re)insurer stands on coal. As the leading world insurance market, Lloyd\u2019s of London has a huge responsibility to pave the path out of coal in time for COP26 in Glasgow this November. Unfortunately, Lloyd\u2019s recently-adopted coal policy is far off the mark and could still help kickstart major new coal projects which are incompatible with a 1.5\u00b0C pathway.<\/b><\/b><\/p>\n<\/div><\/div><\/div> Insurers, it might be assumed, are well positioned to assess risks, particularly when they threaten the entire planet. While most of the 6,600 coal power units under operation must cease operating by 2030 in EU and OECD countries, and by 2040 at the latest worldwide<\/span> to be on track with a 1.5\u00b0C target, 437 companies are still planning new coal projects, including more than 1,000 new coal-fired power plants in 40 countries across the world. If built, these would amount to 25% of the world\u2019s coal-fired electricity generation capacity and undermine our chances of staying below 1.5\u00b0C. Yet, <\/span>Lloyd\u2019s of London is clearly underestimating the climate risk posed by the coal industry given the insurance market place still has not committed to fully phase out coal and has left gaping holes in its current policy<\/b>.<\/span><\/p>\n<\/div> Ten <\/span>major European insurers<\/span><\/a><\/span> already abide by the \u201cno new coal projects\u201d principle but Lloyd\u2019s is not among them – in fact, quite the opposite. <\/span>Lloyd\u2019s of Londons allows new insurance cover for coal plants and thermal coal mines up to January 2022<\/b>. This delay gives insurance companies and syndicates active in the Lloyd\u2019s of London market enough time to provide the essential support coal companies need to kickstart new projects. <\/span><\/p>\n Consequently, Lloyd\u2019s syndicates can potentially provide insurance coverage to the Whitehaven coal mine in England, and Adani\u2019s Carmichael project in Australia<\/b>. Adani\u2019s project will help open up a massive new thermal coal basin, threatening the Great Barrier Reef, endangered species habitat and local water supplies. It is also contested by the Traditional Owners of the land. So far, <\/span>twenty-six of Lloyd\u2019s insurers<\/span><\/a><\/span> have committed not to insure the project, but other Lloyd\u2019s syndicates, such as<\/span> Ark, Markel, Hamilton Group, Lancashire, and WR Berkley<\/span><\/a><\/span> have so far remained silent on Adani. <\/span><\/p>\n There are two other blatant gaps in Lloyd\u2019s coal policy: <\/span><\/p>\n The UK has been one of the strongest advocates for exiting the coal sector. Yet, its main corporate insurer, Lloyd\u2019s of London, is on its way to becoming the insurance market of the last resort for dirty coal companies<\/b>. Indeed, a growing number of insurers, including AXA, Allianz and Zurich, have adopted immediate strong exclusion thresholds to stop covering the risks of most coal companies. While Lloyd’s has committed to phasing out its insurance coverage to companies deriving more than 30% of revenue from thermal coal by 2030, this threshold remains way too high and the timeline way too slow. Lloyd\u2019s is clearly not committed to quitting coal any time soon. <\/span><\/p>\nAn underestimated coal risk\u00a0<\/b><\/h1><\/span>
Lloyd\u2019s can still insure coal projects<\/b><\/h2><\/span>
\n
Far from the exit<\/b><\/h2><\/span>