Lloyd’s of London has moved to give syndicates wider discretion to underwrite coal, oil and gas risks, reversing a four-year push to choke off cover for the most carbon-intensive projects and signalling a more permissive approach in line with national energy policies. The market’s new chief executive, Patrick Tiernan, has set out plans to grant “more freedom” to insurers and to drop the corporation’s previous request that they stop providing insurance for coal and other “planet-warming” fuels.
Tiernan’s stance is framed as deference to statute rather than activism, and follows the departure of Rebekah Clement - Lloyd’s first corporate affairs and sustainability director- earlier this year: Lloyd’s will respect the “laws of the land” and the energy mix chosen by each jurisdiction, a line that also reflects sensitivity to competition and antitrust rules governing how a marketplace can influence member behaviour.
The pivot, revealed in an interview with the Financial Times breaks with guidance issued in 2020 under then chief executive John Neal, when the corporation said participants would be asked to end new cover and investment for thermal coal, oil sands and Arctic exploration from 2022. It also lands amid a changed political climate. In the United States - Lloyd’s single largest market by premium - federal policy and state-level litigation have become markedly less welcoming to climate-aligned finance, with the Trump administration scrapping clean-energy programmes and urging greater hydrocarbon production.
The timing is commercially significant. After several highly profitable years across specialty lines, fresh capital has flowed in and average prices at Lloyd’s fell by about 3.5% at mid-year, sharpening competition. The corporation’s half-year figures show a combined ratio of 93% and pre-tax profit of £4.2 billion, with claims payments of £14 billion in the period.
For energy buyers, the practical effect is likely to be a deeper bench of London capacity and more syndicates willing to participate on upstream and midstream programmes, even as peers on the Continent continue to tighten parts of their fossil-fuel appetites. For underwriters, the opportunity arrives with familiar caveats: casualty tails tied to transition risks, exposure to heat- and wildfire-related attritional losses onshore, and the need for tighter wordings on pollution, seepage and decommissioning.
Lloyd’s insists the change is not an ideological turn but a return to first principles: act as an open marketplace, avoid setting public policy and let national energy strategies set the boundary of insurability. The approach also reflects the market’s dependence on the US, which accounts for about half of Lloyd’s business and where resistance to investor-driven divestment has hardened.
Whether the recalibration proves durable will depend less on rhetoric than on results. If expanded energy books earn through at technical rates - despite a softer rating environment and elevated large-loss volatility - the move will look like hard-headed pragmatism. If not, the market will be reminded why it sought to narrow its heaviest-emitting exposures in the first place.
