Reclaim Finance has published an open letter addressed to Patrick Tiernan, who begins his tenure as CEO of Lloyd’s of London on June 1st. The open letter calls on him to show real leadership on climate change in the face of spiralling climate risks, in particular by taking the first preventive measure: to stop fuelling them by withdrawing support for new and expanded fossil fuel projects. It also sets out a list of specific actions specific to the Lloyd’s market that Patrick is invited to take to achieve this goal.<\/p>\n<\/div>
Dear Patrick,<\/p>\n<\/div>
As you take the reins at Lloyd\u2019s of London, the world\u2019s largest specialty insurance market, we urge you to use your unique position to act to prevent spiralling climate risks that threaten human society and the future of the insurance industry itself.<\/span><\/p>\n In 2025, reality is catching up with forecasts: at <\/span>+1.55\u00b0C<\/u> <\/a>warming, we are already seeing signs of fragility. In California, <\/span>several insurers are withdrawing<\/a> from whole segments of the market. In the UK, the market town of Tenbury Wells could become the <\/span>first town abandoned due to climate change<\/a><\/span> as shop owners can no longer afford insurance. Allianz board member <\/span>G\u00fcnther Thallinger<\/a><\/span> warns of the cascading effects of uninsurability, threatening the very survival of our economic and financial systems.<\/span><\/p>\n Analysts <\/span>caution<\/a><\/span> that as the protection gap widens, governments will oblige insurers to shoulder even more of the climate bill. In short, your balance sheet now depends on preventing and not only pricing climate risk.<\/span><\/p>\n Prevention starts by stopping the market\u2019s support for new fossil fuel infrastructure: in the <\/span>Internation Energy Agency (IEA)\u2019s pathway to net zero emissions<\/a><\/span>, there are no new coal projects or new oil & gas upstream\/midstream projects(<\/span>1)<\/span>. <\/span>This represents our best chance to limit global warming below 1.5\u00b0C and avoid its worst consequences.<\/span> Yet fossil fuel build-up <\/span>continues at pace<\/a><\/span>, facilitated by the insurance industry. And Lloyd\u2019s of London remains a central hub for the insurance of fossil fuels(<\/span>2)<\/span>. <\/span><\/p>\n<\/div> Lloyd\u2019s <\/span>cooperation agreement with the Prudential Regulation Authority<\/a><\/span> (PRA) makes it clear that Lloyd\u2019s is responsible for \u201cthe overall strategic direction of the market [and] control over how much (and what type of) risk to allow into the market as a whole\u201d.<\/span><\/p>\n Lloyd’s took the first step along this journey back in 2020, when it <\/span>announced<\/a><\/span> that \u00ab\u00a0Managing agents in the Lloyd\u2019s market will be asked to no longer provide new insurance cover for thermal coal-fired power plants, thermal coal mines, oil sands, or new Arctic energy exploration activities from 1 January 2022\u00a0\u00bb.<\/span><\/p>\n Yet since that time, the requirements have been watered down to guidelines, and Lloyd\u2019s has taken no visible steps to enforce them. Meanwhile, Lloyd\u2019s <\/span>\u2018Insuring the transition\u2019 roadmap<\/span><\/span><\/a> does nothing to address the underwriting of new fossil fuel projects that simply cannot go ahead if we are to meet global climate targets.<\/span><\/p>\n<\/div> While at Aviva, you were involved in the\u00a0<\/span>decision<\/a><\/span> to exit underwriting of the standalone operational fossil fuel power market. Within 3 years, Aviva’s renewable energy insurance business\u00a0<\/span>grew<\/a><\/span> to more than 150% of the size of the fossil fuel power generation book it exited in 2019. We hope to see the same foresight and leadership from you as Lloyd\u2019s CEO.<\/span>\u00a0<\/span><\/p>\n As the world\u2019s leading insurance market, Lloyd\u2019s is uniquely positioned to transform its market and the industry by taking strong action against fossil fuel expansion. <\/span>Redirecting underwriting capacity to support <\/span>sustainable energy infrastructure<\/a><\/span> will enable market leadership in fast-growing premium streams. Every pound diverted from fossil fuel expansion prevents lock-in of climate damages and protects the long-term sustainability of your industry \u2013 and frees up capacity that can be diverted to insure the core infrastructure of a liveable and insurable future.<\/span>\u00a0<\/span><\/p>\n<\/div> Stopping Lloyd’s support for fossil fuel expansion must remain an absolute priority, given that fossil fuel combustion accounts for almost 90% of greenhouse gas emissions. Beyond the issue of fossil fuels, a just transition also involves taking into account other challenges such as the preservation of biodiversity and respect for human rights.<\/span><\/p>\n We are entering a dangerous phase. While 2024 saw yearly average global temperatures more than <\/span>1.5\u00b0C above preindustrial averages<\/a><\/span> for the first time, the political consensus on the need for climate action is <\/span>breaking down<\/a><\/span>. Now, more than ever, sober analysis and bold leadership are needed. We are counting on you to provide it.<\/span><\/p>\n We would be delighted to discuss the issues raised in a meeting at a time convenient to you.<\/span><\/p>\n Yours sincerely,<\/span>As CEO of Lloyd\u2019s of London, you have the power and the responsibility to make a real difference<\/span><\/h2><\/span>
Towards win-win action for risk reduction<\/h2><\/span>
Reclaim Finance urges you to:<\/h2><\/span>
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\n<\/span>Lucie Pinson, <\/span><\/b>Founder and Director of Reclaim Finance<\/span><\/p>\n<\/div><\/div><\/div>