Tiernan: Lloyd’s aiming to build ecosystem to insure energy of the future

Lloyd’s chief of markets Patrick Tiernan hailed the energy transition as a “phenomenal opportunity” as he revealed the Corporation was willing to take risks to help facilitate innovation.

Speaking to The Insurer TV on the sidelines of the Bermuda Risk Summit last week, Tiernan said Lloyd’s was taking a longer-term view as it aimed to attract more climate and sustainability-focused syndicates to One Lime Street.

“One of the great advantages of working at the Corporation of Lloyd's is we don't have the quarterly rhythm of results, and this affords us the opportunity to look towards a longer-term horizon,” he said.

“The energy transition and the energy of the future is clearly a phenomenal opportunity.”

This has been demonstrated by a series of recent launches at Lloyd’s, including Axis Energy Transition Syndicate 2050, Hiscox’s ESG 3033 sub-syndicate and Oka’s Syndicate 1922.

Tiernan pointed towards the investment in the energy transition taking place in the US, EU and UK as a clear indicator of the opportunities for the insurance market.

“We want to build an ecosystem for the new energy of the future similar to that we had traditionally 20 to 30 years ago for fossil-fuel based energy.

“But we have to do that in a smart way. If Lloyd's is to be the insurer of the transition we need to focus on a couple of different areas.

“We have to focus on mitigation, which is the more innovative end of the market, as well as adaptation in the harder-to-abate sectors. Both need a lot of new ideas; both need our new capital.”

When it comes to mitigation, Tiernan said Lloyd’s is prepared to “take a little bit more risk” in terms of the opportunities it supports.

“For example, we recently supported a new carbon capture syndicate [Oka’s Syndicate 1922]. There isn't 20, 30, 100 years of data on this, as there would be for some of the more traditional perils, but we're prepared to back it on the basis that it's a risk that we can very easily diversify within the larger portfolio.

“We think there might be five, six, seven, eight, nine, 10 different types of approach. One or two of them may be unsuccessful, a few middling but four or five may be phenomenally successful.

“We're prepared to sort of take those bets to be a real accelerator on that innovative journey.

“We have a new chief underwriting officer – the first time we have had a CUO in the Corporation – in Rachel Turk, and she has a very strong pedigree in all things sustainability,” Tiernan continued.

He said Turk will be working with her team, Lloyd’s corporate affairs team and CEO John Neal on further initiatives.

Tiernan said the focus was going to be around positive discussions from an underwriting perspective, in contrast to early discussions around ESG, much of which was around what wasn’t going to be supported.

“That's not as easy to invest into. Investors and underwriters and financiers – they require positive cases. Lloyd's will be focused over the coming months on presenting the positive cases for insuring the transition.”

Tiernan’s comments on transition were part of a wider interview during which he announced that Lloyd’s Lab would be launching in Bermuda during the first half of 2025.

During The Insurer TV’s first interview with Lloyd’s chief of markets, he covered a range of other topics, including: