Lloyd's of London Ditches Fossil Fuel Coverage Ban, Citing A-political Role.

Lloyd's of London's new CEO, Patrick Tiernan, has reversed the previous policy of ending insurance cover for fossil fuel projects. Tiernan stated that Lloyd's will respect the energy policies of the countries where its insurers operate and will not pressure insurers to withdraw coverage for coal and other high-polluting fossil fuels. This marks a reversal from a 2020 pledge made under former CEO John Neal. Tiernan emphasized Lloyd's apolitical role and its need to remain neutral in the face of geopolitical tensions.

Lloyd's of London's new CEO, Patrick Tiernan, has reversed the previous policy of ending insurance cover for fossil fuel projects, reported the Financial Times [1]. Tiernan stated that Lloyd's will respect the energy policies of the countries where its insurers operate and will not pressure insurers to withdraw coverage for coal and other high-polluting fossil fuels. This marks a reversal from a 2020 pledge made under former CEO John Neal, who had indicated that Lloyds insurers would be “asked to no longer provide new insurance coverages or investments in these activities.”

Tiernan emphasized Lloyd's apolitical role and its need to remain neutral in the face of geopolitical tensions. He stated, "Lloyd’s strength is that it’s apolitical. It is important we don’t wade into issues we don’t need to . . . Lloyd’s needs to remain apolitical, so we preserve that role when times are choppy in the regions where we operate." The decision aligns with the approach taken by former US President Donald Trump, who actively promoted the fossil fuel industry by dismantling clean energy initiatives and encouraging oil and gas companies with the slogan "drill, baby, drill." The US market is a significant contributor to Lloyd’s business, accounting for approximately 50% of its operations [1].

The announcement comes at a time when Lloyd’s is focusing on maintaining a "disciplined" approach to pricing to prevent premiums from falling too low. Lloyd’s reported a pre-tax profit of £4.2bn ($5.66bn) for the six months to June, a decrease from the £4.9bn recorded in the first half (H1) of 2024. It paid £14bn in claims during H1, related to California wildfires and the impact of the Ukraine conflict on aviation. The corporation's combined ratio stood at 92.5% in H1 2025, compared to 83.7% in the previous year [1].

Meanwhile, in the North Sea, the head of the oil and gas regulator, Stuart Payne, said being a political football was "not a good thing" [2]. He emphasized that cutting the sector's carbon emissions presents significant commercial benefits and that the energy transition has been "well underway" for decades. Payne noted that about half of the £100bn expected to be invested in the North Sea over the next few years will be in alternative energies like carbon capture and storage (CCS) and floating wind [2].

Stuart Payne's remarks follow a pledge by UK Conservative leader Kemi Badenoch to rid the NSTA of the net-zero "burden" and task it with the sole job of maximizing oil and gas production [2]. Badenoch addressed the Offshore Europe conference in Aberdeen, where she promised to scrap the net-zero compatibility tests that come with oil and gas permitting, adding that "we will judge… on one metric alone - how much oil and gas they produce." She also stated that there would be no more "judicial overreach … because a judge is persuaded by a pressure group" [2].

The UK Conservatives hope to scrap the ban on new oil and gas exploration licences [2]. Oil and gas production in the North Sea has been in decline for more than 25 years since it peaked in 1999. Three years ago, an energy profits levy - or windfall tax - was introduced when prices spiked, taking the headline rate of tax on profits to 78% [2].

References:
[1] https://finance.yahoo.com/news/lloyd-chief-overturns-fossil-fuel-093126871.html
[2] https://www.aol.com/net-zero-not-platitude-oil-221422847.html