Lloyd’s, the renowned insurance and reinsurance market, has announced its resignation from the Net Zero Insurance Alliance (NZIA), becoming the tenth major player to do so in the past week. The decision, effective immediately, reflects the growing concerns and pressures faced by the insurance industry.
Lloyd’s emphasized its commitment to sustainability by pledging continued support for the United Nations’ Principles for Sustainable Insurance and the Sustainable Development Goals. The company intends to pursue its sustainability strategy while actively contributing to the global economy’s transition.
John Neal, Chief Executive of Lloyd’s, highlighted the need for the global climate alliance to reconsider its membership rules. He urged the NZIA to adopt a less prescriptive approach to prevent further departures and avoid potential disintegration. Political pressure from certain U.S. states has compelled companies to exit the alliance, making Lloyd’s decision less surprising.
Insurers leaving NZIA in droves
Joining the ranks of QBE and Sompo Holdings, who withdrew last week, Lloyd’s follows in the footsteps of major insurance firms such as AXA and Allianz in marking its departure from the NZIA.
According to reports in the Financial Times, some governments in Europe have privately voiced concerns that insurers in the NZIA could cause the cost of energy to rise if they collectively stopped underwriting fossil fuels, revealed a source close to the leadership team at Gfanz.
The report stated: “For national security [reasons] they are worried about keeping the lights on,” the source stated.
AXA France also said on Thursday, Axa said on Thursday that is would its “sustainability journey, as an insurer, an investor and a responsible company”. Allianz also remarked that it remained “fully committed”.
Meanwhile, reinsurer Scor’s departure was announced on Thursday with a new set of “climate pledges”. The Japanese insurer Sompo, also revealed it would continue to pursue its climate goals “vigorously” while outside the group.
And, Lloyd’s stated that it remained “committed to delivering our sustainability strategy, including supporting the global economy’s transition”.
Is NZIA now in a critical position?
The United Nations Environment Programme (UNEP) has stressed the urgent need for collaboration between the global insurance industry and the NZIA to effectively address the climate emergency. With reinsurance giants like Swiss Re, Scor, Munich Re, Zurich Insurance, and Hannover Re having already withdrawn, UNEP Finance Initiative’s Principles for Sustainable Insurance (PSI) highlights the criticality of industry cooperation.
Speculations regarding the reasons behind the recent wave of withdrawals from the NZIA suggest concerns over potential anti-trust claims. Additionally, insurance companies may fear losing business opportunities in the US if they continue to champion the net-zero agenda, given the resistance from Republican lawmakers on environmental, social, and governance (ESG) issues.
As the insurance industry faces mounting challenges in navigating climate change and sustainability, the departure of Lloyd’s and other major players from the NZIA raises questions about the future of collaborative efforts in addressing the global climate crisis.
