Lloyd’s of London, the world’s oldest insurance exchange, will stop investing in coal “to help the world transition to a low-carbon economy,” CEO Inga Beale says. But that decision arrives 25 years after Lloyd’s first learned about the risk that climate change presented to its operations, according to UK renewable energy entrepreneur Jeremy Leggett.
Lloyd’s, like other insurance companies, invests the money it receives from premiums in a variety of assets meant to provide the funds to cover claim payouts. As of April 1, the Guardian writes, the London exchange “will start to exclude coal from its investment strategy. The definition of what is a coal company and the criteria for divestment will be set over the coming months.”
But for better or worse, the venerable exchange didn’t rush its decision. Lloyd’s “has been slower to take action than other insurers,” The Guardian says, citing examples from Allianz to Zurich of companies that “have been shifting away from coal and other fossil fuels due to concerns about climate risks.” The Unfriend Coal Network estimates that insurers have divested about £15 billion from fossils in the past two years.
But Lloyd’s may have been more than just behind its competitors in recognizing the implications of climate change for its investment strategy. It may have turned a blind eye for decades.
According to Leggett, Lloyd’s participants were told a quarter-century ago that climate change driven by human activity would increasingly threaten their investments and send damage claims soaring.
In February 1993, Leggett presented a report entitled “Climate Change and The Insurance Industry” to about 100 Lloyd’s underwriters and agents in London, he writes in a blog post this week.
Among the events he cited to underscore its message was a storm the previous December that “flooded the New York subway, causing it to be closed down for the first time in its history. Hurricane-force winds, heavy rains, river and tidal flooding, and massive snowfalls caused $650 million in insured losses. The barrage dragged houses into the sea, wreaked havoc along 600 miles of coastline, killed at least 18 people, and caused a state of emergency to be declared in New York, New Jersey, and Connecticut.”
“An issue arises here,” Leggett asserts. “Lloyds finally decided to divest from coal, the most dangerous fossil fuel in terms of climate change. By delaying a quarter of a century enacting what is surely such an obvious self-protection erasure, how much damage has Lloyd’s done to investors who have placed their trust in them, in the interim, when it comes to weather-related disasters?”