At the invitation of His Royal Highness The Prince of Wales, Lloyd’s has brought together leaders from a number of the largest and most influential global insurance firms to form an Insurance Task Force (ITF) as part of the Sustainable Markets Initiative, to drive progress as a group and accelerate the pace of industry transitions towards a more resilient and sustainable future, putting Nature, People and Planet at the heart of global value creation.
The ITF, chaired by Lloyd’s Chairman Bruce Carnegie-Brown, has committed to supporting the global transition through delivering five key initiatives in 2021 through its Statement of Intent that will provide innovative new insurance products and services, and critical financial and risk management support across a number of industries and geographies to drive positive change.
In line with the commitments laid out in the Statement of Intent, the ITF is focusing its attention on delivering action across five specific areas throughout the remainder of 2021:
1. Driving insurance product and services innovation to empower commercial customers to develop, invest in and scale their sustainability initiatives, supporting green innovation across multiple sectors and geographies. As part of this initiative, the Task Force will launch at least two new insurance products to protect priority industries, such as nuclear energy, hydrogen and offshore wind, against an evolving risk landscape, in order to enable their accelerated growth.
2. Implementing sustainable processes across the insurance supply chain to encourage and incentivise individuals to take positive actions to live more sustainably. This will include launching an industry-wide framework to drive sustainable outcomes for customers, for example through introducing “build back better” claims clauses in home insurance policies to encourage customers to rebuild damaged properties with more sustainable materials in support of a net-zero transition.
3. Establishing a public-private disaster resilience, response, and recovery framework to help protect developing nations from the evolving economic and societal impacts of climate change, including the effects of increasingly frequent and severe weather events. The framework will leverage the insurance industry’s unique ability to combine an insurance product with risk management and loss recovery services, in order to increase preparedness for and limit the impacts of these events. Once developed, this solution will be rolled out across vulnerable countries to support better disaster response and recovery, with a pilot being initiated in 2021.
4. Developing a framework for accelerating and scaling sustainable investment to help unlock the global (re)insurance industry’s more than $30tn in assets under management, increasingly directing capital towards investments that drive climate-positive outcomes in both developed and developing nations. As part of this initiative, an investment proposal will be developed through collaboration between public and private sectors, with a particular focus on renewable energy and climate transition assets to enable the transition towards a low-carbon economy.
5. Defining the industry’s ability to enable multi-sector transitions through developing an approach to measuring the carbon footprint across underwriting portfolios and establishing a framework to track the global insurance industry’s ability to support the transition towards net zero across multiple industries and geographies. Over time, this framework can be scaled to incorporate additional data and metrics as these become available.
The ITF will align with existing initiatives to accelerate activity and deliver tangible progress over the course of 2021, and ahead of the 26th UN Climate Change Conference of Parties (COP26) in November 2021, which marks a significant milestone in global efforts to combat the impacts of climate change.
“The insurance industry is exceptionally well placed to understand the impact of climate change and the damage it can cause to us all if we don’t take action now. This is why I am so pleased that a large number of the world’s leading insurance companies have joined together to identify how the insurance industry can help put Nature, People and the Planet at the heart of our entire economy.”
His Royal Highness The Prince of Wales
“As the world begins to recover from a pandemic that has caused significant and far-reaching financial and societal challenges, it does so with an opportunity to build back with sustainability as a foundation and guiding principle. Although climate change poses unprecedented systemic risk, it is one which – through partnership and accelerated action – we have the means to address. As a task force, we are making a resolute commitment to be a catalyst for action to help create a more sustainable future through the risks we manage and the capital we invest.”
Bruce Carnegie-Brown, Lloyd’s Chairman