Open letter to new Lloyd’s of London CEO Patrick Tiernan calling for climate leadership

Dear Patrick,

As you take the reins at Lloyd’s of London, the world’s 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.

In 2025, reality is catching up with forecasts: at +1.55°C warming, we are already seeing signs of fragility. In California, several insurers are withdrawing from whole segments of the market. In the UK, the market town of Tenbury Wells could become the first town abandoned due to climate change as shop owners can no longer afford insurance. Allianz board member Günther Thallinger warns of the cascading effects of uninsurability, threatening the very survival of our economic and financial systems.

Analysts caution 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.

Prevention starts by stopping the market’s support for new fossil fuel infrastructure: in the Internation Energy Agency (IEA)’s pathway to net zero emissions, there are no new coal projects or new oil & gas upstream/midstream projects(1). This represents our best chance to limit global warming below 1.5°C and avoid its worst consequences. Yet fossil fuel build-up continues at pace, facilitated by the insurance industry. And Lloyd’s of London remains a central hub for the insurance of fossil fuels(2).

Lloyd’s cooperation agreement with the Prudential Regulation Authority (PRA) makes it clear that Lloyd’s is responsible for “the overall strategic direction of the market [and] control over how much (and what type of) risk to allow into the market as a whole”.

Lloyd’s took the first step along this journey back in 2020, when it announced that “Managing agents in the Lloyd’s 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”.

Yet since that time, the requirements have been watered down to guidelines, and Lloyd’s has taken no visible steps to enforce them. Meanwhile, Lloyd’s ‘Insuring the transition’ roadmap does nothing to address the underwriting of new fossil fuel projects that simply cannot go ahead if we are to meet global climate targets.

While at Aviva, you were involved in the decision to exit underwriting of the standalone operational fossil fuel power market. Within 3 years, Aviva’s renewable energy insurance business grew 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’s CEO. 

As the world’s leading insurance market, Lloyd’s is uniquely positioned to transform its market and the industry by taking strong action against fossil fuel expansion. Redirecting underwriting capacity to support sustainable energy infrastructure 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 – and frees up capacity that can be diverted to insure the core infrastructure of a liveable and insurable future. 

• Immediately require each managing agent to stop underwriting fossil fuel expansion, starting with coal expansion, and align with the Lloyd’s net zero underwriting target.

• Make the establishment of a new managing agent conditional on the submission of an underwriting strategy aligned with the market-wide net zero commitment by 2050, including the Lloyd’s underwriting policy for risks related to new fossil fuel projects underwritten by managed syndicate(s).

• Require each managing agent to disclose its underwriting policy for risks related to new fossil fuel projects underwritten by managed syndicates (coal, oil and gas) as part of the publication of an annual sustainability strategy.

• Monitor and transparently report a summary of all its managing agents’ policies on coal, oil and gas and LNG in the Lloyd’s annual ESG report, and set enforcement mechanisms and sanctions if managing agents do not comply after a one-year deadline.

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.

We are entering a dangerous phase. While 2024 saw yearly average global temperatures more than 1.5°C above preindustrial averages for the first time, the political consensus on the need for climate action is breaking down. Now, more than ever, sober analysis and bold leadership are needed. We are counting on you to provide it.

We would be delighted to discuss the issues raised in a meeting at a time convenient to you.

Yours sincerely,
Lucie Pinson, Founder and Director of Reclaim Finance