Insurance and reinsurance marketplace Lloyd’s has launched a new consultation, inviting feedback from its members on the proposed road map for insuring a low-carbon transition.
The proposed approach focuses on all areas of sustainability for the market over the next three years.
These areas mainly include underwriting, capital and reserving, investments and exposure management.
Open between 23 November 2023 and 31 January 2024, this consultation will support Lloyd’s market participants in setting their own sustainability strategies such as understanding the changing requirements of regulatory reporting.
It will further help in providing better clarity on how Lloyd’s will support customers as they react to a volatile macro-environment, while also maintaining decarbonisation and transition progress to achieve net-zero ambitions.
Lloyd’s said that the road map further seeks to deliver certain short-term actionable steps that can help in focusing on the areas that require more attention.
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The consultation also comprises resources on managing the transition risk of managing agents’ investment portfolios.
According to a Reuters report, in terms of underwriting, the insurance market has indicated that it expects managing agents to provide specific sustainability strategies that are “fit for purpose”.
The insurance market also expects agents to evaluate these strategies across areas such as governance, transition planning and emissions measurement.
From next year, it would look to begin deepening the quality of data collected around flood risk and climate-related liability risk, it said in a “road map” released on Thursday.
Lloyd’s is also planning to carry out a market survey next year to understand to what extent managing agents would consolidate climate change considerations into their reserving and capital models, the report noted.
Lloyd’s CEO John Neal said: “We hope that in setting out this consultation, the market will have greater clarity on the approach the corporation is planning to implement, to support our customers in facing the challenges of transitioning to lower-carbon business models.
“Our aim is to give our market participants greater confidence in setting, embedding and operationalising their own individual climate strategies, through the transition and beyond.”