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Lloyd's of London marketplace & coal insurance - FAQs

Making the confusing world of insurance a little clearer

What is the Lloyd’s of London?

Firstly, it’s nothing at all to do with Lloyd’s PLC, the bank – they’re not great either, but that’s another story.

Lloyd’s of London is a large insurance corporation with an HQ in London but trade insurance globally. In its own words, Lloyd’s of London “oversees and supports the Lloyd’s market, ensuring it operates efficiently and retains its reputation as the market of choice for specialist insurance and reinsurance risk.” You can watch Lloyd’s of London’s very corporate video explaining what they do.

What is “Lloyd’s marketplace”?

Insurance companies use Lloyd’s of London’s marketplace much like sellers use eBay’s website. Just as eBay supports bidding between buyers and sellers, so does Lloyd’s of London, employing over 200 brokers to match insurance customers with insurance companies. And just like eBay, Lloyd’s of London offers some form of guarantee for insurance bought via their marketplace, encouraging trades through to be made through it.

What is Lloyd’s of London's connection to Adani and West Cumbria coal mines, and fossil fuels

Lloyd’s of London marketplace is in the top 4 for insuring climate-wrecking fossil fuel projects around the world. Lloyd’s of London’s marketplace is particularly attractive to large fossil fuel projects as Lloyd’s has a reputation for getting high-risk projects insured that other insurance companies won’t touch. One way it does this is by splitting an insurance policy, and spreading the risk, between insurance companies using their marketplace. This amounts to an insurance for climate chaos as it’s only with insurance that companies can take the financial risks to dig new coal mines, build new tar sand pipelines, and explore new gas and oil fields.

Lloyd’s of London has refused to rule out allowing Adani’s Carmichael coal mine in Australia or the West Cumbria coal mine in the UK to obtain insurance via their marketplace. If Adani’s Carmichael coal mine gets insurance and goes ahead, it would open up one of the world’s biggest coal deposits contributing to a climate catastrophe.

What is Lloyd’s of London doing to prevent their contribution to climate change?

Not much, and definitely not enough.

Lloyd’s of London have only committed to a policy of greenwash that is incompatible with our climate crisis, continuing to insure risky projects that no one else will touch. So far Lloyd’s of London has committed to asking insurers operating in their marketplace to stop insuring tar sands, thermal coal mines, and Arctic exploration, phasing this out by 2022. But ‘reinsurance’ for these worst offenders is allowed up until 2030.

This also leaves a huge range of climate-wrecking projects free to continue insuring their risk via Lloyd’s of London marketplace with no policy at all to discourage it. In practice, this means the planned West Cumbria mine could be insured via Lloyd’s of London marketplace as it intends to mine ‘coking coal’, not ‘thermal coal’, although both are eventually burned, producing similar emissions.

What more could Lloyd’s of London marketplace do to prevent their contribution to climate change?

Lloyd’s of London could most simply ban all fossil fuel insurance trading via their marketplace. Their own statement clearly indicates this would be possible; “Lloyd’s publishes minimum standards and monitors compliance with those minimum standards. Lloyd’s by-laws also set out a number of rules with which market participants are required to comply”.

Fossil fuel projects only amount to around 5% of Lloyd’s of London’s marketplace insurance trades, so the company would still have a future without selling out ours.

What would be the impact if Lloyd’s of London ruled out fossil fuel insurance?

Some of the fossil fuel projects would source insurance from other providers and marketplaces, but many using Lloyd’s of London marketplace have failed to secure insurance elsewhere—Lloyd’s of London is sometimes their last chance. Let’s not give it to them.

Insurance providers also look to one another in setting their policies, so if Lloyd’s of London drops fossil fuel insurance, it is likely other insurance traders and providers will too—with a bit of encouragement.

Insurance might not be the sexiest subject, but it is a very vulnerable link in the chain needed to start and continue these huge climate-wrecking projects. It’s time Lloyd’s of London take responsibility for the role its insurance marketplace has in our collective future.

What is an insurance policy?

A contract that a company or individual takes out with an insurer to protect them against specific risks in ways that are agreed and noted in the contract.

What is ‘claims made’ insurance?

Type of insurance policy that will cover insurance claims made whilst the insurance policy is in force – even if the event leading to that insurance claim happened before that insurance policy came into force.

What is ‘claims occurring’ insurance?

Type of insurance policy that will cover insurance claims for events that occurred whilst the insurance policy is in force – even if the claim for it happens after the insurance policy stopped being in force.

No related insurance:

They don't insure coal mines e.g. they just cover travel insurance.

What is ‘run-off’ insurance:

AKA: Not 'live' insurance. Type of insurance policy that comes into effect when a company stops trading. So, any claims made under it will relate to events that happened before the company stopped trading and the policy started. This is used by companies that had ‘claims made’ insurance, and want insurance in case anyone takes action against them after the company for the period of time after they stopped trading but are still liable.

Want to know more?

Day of action against Lloyd's of London

On the 17th May 2021, at 08:30am, people across the UK will join us in a day of action against Lloyd’s of London, one of the world's leading insurers of fossil fuel projects. We demand that they stop insuring climate chaos!

Take part in our UK-wide day of action against Lloyd’s of London (no relation to Lloyds bank) and their marketplace insurers of fossil fuel projects on 17 May - the day many will be returning to their offices after lockdown. We need to let the Lloyd’s of London's marketplace know we’re aware of the critical role they and their insurers play in enabling risky climate-wrecking projects from the first day they return to their offices.

How do I get involved?

There are actions outside the offices of fossil fuel insurers all around the UK - check out what's happening near you and sign up to get more info!

What kind of action?

Anything you want - get creative! An old bedsheet and a bit of paint is all you need for a banner. And we'll post you fliers to hand out to insurance staff and the public so you don't have to remember all the facts (email us a postal address).

We've made a full action brief that's got lots more details, ideas, background, resources, and legal stuff in.

Can't get out on the streets, or there isn't an action happening near you?

Please help us make a big impact on social media. Check out our social media pack for sample messages to share before the action and on the day.

Background

We’re demanding Lloyd’s of London insurers act now to rule out insuring the Adani (Carmichael) and West Cumbria coal mines, and fossil fuel projects more widely. Lloyd’s of London has so far only said they’re willing to rule out new insurance trades on Arctic exploration, thermal coal, and Canadian tar sands by the end of 2021…but allow the renewal of insurance of even these shameful practices until 2030. That’s an insult to the Paris Agreement and to all communities that will suffer the worst effects of climate change.

Lloyd’s of London marketplace is in the top 4 for insuring fossil fuel projects - and underwrite fossil fuel projects that other insurance companies won't touch, allowing mining companies to take risks exploring and unearthing new fossil fuels that we need to keep in the ground. Insurance is a vulnerable link in the chain needed to start and continue these huge climate-wrecking projects.

Despite being one of the main insurance marketplaces propping up the glob al fossil fuel industry, these insurance trades only account for around 5% of Lloyd’s of London insurance market. That means, with enough encouragement, insurance for all fossil fuel projects—such as the Adani or West Cumbria coal mine—could be banned. Join us in taking action to stop some of the riskiest, climate-wrecking fossil fuel mega-projects in their tracks.

STOP PRESS: Public inquiry called into West Cumbria coal mine!

In a surprise decision, the West Cumbria coal mine application is going to a public inquiry called by Robert Jenrick (Secretary of State), announced late yesterday (11.03.2021). Climate change will never be a local issue.

Why now?

  1. ‘Public controversy’ (this is literally your efforts!).
  2. The Sixth carbon budget was released in December—this coal mine alone would exceed the sub-allocation for active and old mines. You've since made it impossible for the Council and government to ignore that.
  3. Legal challenges (last week West Cumbria Mining Ltd applied for a Judicial Review of the Council’s decision to reconsider the application – a decision that again you helped make happen).

What now?

A public inquiry is a formal process started by a Minister (Robert Jenrick in this case) and run by The Planning Inspectorate where the facts of the case are examined more closely than in a council hearing. We now have another opportunity to expose the falsehoods within justifications for the West Cumbria coal mine and highlight the reasons it must never go ahead. These include:

  1. Over 85% of the mined coal would be exported, maybe more with high sulphur concentrations that are too much for the British steel industry – how does ‘domestic demand’ justify that?
  2. There’s nothing ‘neutral’ in new coal – it’s time to put that industry myth to bed.
  3. Jobs will be limited in time and number, and lower paid compared to what’s possible with investment in skilled green jobs.
  4. Approving new coal mines is incompatible with UK’s decarbonisation targets – and the Climate Change Committee has our backs on that.
  5. Approving a new coal mine during the same year the UK hosts the G7 and the COP26 summits, and as co-hosts the Powering Past Coal Alliance would signal to other countries they can pay lip-service to their climate change commitments.

As a grassroots supporter group, Coal Action Network will do what we always do, and that’s to fight for front-line communities to get their knowledge and voices heard in spaces like this public inquiry. We’ll keep you updated—but follow-us on Twitter if you use it, we'd like to share things with you there.

Tonight, the end of an 800-year era for coal exports from the North East of England

Tonight, 18th February 2021, marks the final shipment of coal mined from the North East of England. This marks a momentous victory for the years of anti-coal action, most recently the successfully defeated open cast coal mine application in Dewley Hill, near Newcastle.

The heritage of coal exports from the North East of England goes back to the 13th Century, but it has increasingly become a legacy in decline and with it, levels of deprivation that are also seen in other former-coalfield regions of the UK. The government must do more to ensure there is a just transition from jobs in coal and fossil fuels, to jobs in a genuinely green economy.

Jude Campbell, who campaigned against an application for a new coal mine in Dewley Hill from 2019-2021, says “As a former union rep the prospect of redundancy… does not sit easily with me. However, [coal is] a declining industry and it is grossly irresponsible to promise these workers employment in this industry ad infinitum when coal is on the way out in favour of green technologies”.

So today, at the end of an era, would be an apt landmark for government to ‘level up’ by renewing and acting on their commitment to materially support a sustainable economy in the North East of England.

With the UK’s climate commitments (not least to phase out coal-fired power generation by 2024/5) and the declining contribution of coal to the national grid, this day was inevitable – and critical if the UK is serious about taking action on climate change. Coal remains the single largest emitter of CO2 in the world, out-stripping oil and gas. Without a rapid and drastic reduction in the use of coal, catastrophic climate change is certain.

Tonight, coal from Durham open cast coal mine, operated by Hargreaves, will leave the UK on a ship from Longwave Port of Tyne, most likely to be burned in a power station to produce electricity. This coal mine ceased actively extracting coal in 2020. Now Hargreaves is merely transporting mined coal out of the mine - the last open cast coal mine to do so in the North East after Bradley open cast coal mine in County Durham, operated by Banks’ Group, had its application for extension rejected and closed in August 2020.

“Coal is a proud part of our history in the North East, but it is not our future” – Jos, Newcastle.

Published: 18.02.2021

Confirmed: Newcastle City Council set to decide fate of proposed new opencast coal mine at Dewley Hill

Stop press: the Council’s own Planning Officer’s report recommends rejecting the opencast coal mine as it “would not be environmentally acceptable”

On the 18th December 2020, Newcastle City Council decides whether to protect 250 acres of greenbelt land or allow a controversial opencast coal mine on the north-eastern edge of Newcastle in an online hearing. Banks Group applied in 2019 for a new opencast mine to extract 800,000 tonnes of thermal coal. 451 residents of Newcastle have since signed letters to their Councillors asking them to vote against this application. The Council’s own Planning Officer’s report concludes the proposed coal mine “would not be environmentally acceptable”, recommending councillors to reject the application as well.

Professor Paul Ekins O.B.E., a leading resource enconomist at UCL Institute of Sustainable Resources,

What would the impacts be on the local environment and communities?

The local Defend Dewley Hill campaign, has fought the proposed opencast mine since 2019 when Banks Group proposed to swallow 250 acres of Newcastle’s green belt land. Waterways, mature trees, hedgerows, wildlife, top soil, and public rights of way would be torn up if this destructive open cast mine were permitted.

Northumberland Wildlife Trust is concerned that an opencast mine would harm farmland birds such as skylark, lapwing, and yellowhammer, with the Chief Executive stating “We are totally against coal extraction as a trust”. There may also be risk to Dewley and Ouse burns (waterways) that supply Newcastle residents’ water from the open cast mine. The coal that would be extracted from this open cast mine is intended either to burned in power stations or to industry, in the UK or abroad. If used in the UK, the coal extracted could endanger the Government’s commitment to have net zero emissions by 2050.

Jude Campbell from Defend Dewley Hill said, “This application offers no benefit to the local community. Banks Group claims the opencast coal mine would create 50 new jobs at Dewley Hill but these are not new jobs for local people, simply continued employment for their existing workforce. As a former union rep the prospect of redundancy for Banks employees does not sit easily with me. However, Banks are promoting an unsustainable business model in a declining industry and it is grossly irresponsible to promise these workers employment in this industry ad infinitum when coal is on the way out in favour of green technologies. Banks Group have their own renewables division, they should be taking advantage of green technology grants whilst retaining and retraining employees.”

Whether the coal is used in the UK or abroad, and whether it is used in power stations or other industries, Professor Paul Ekins O.B.E., a leading resource enconomist at UCL Institute of Sustainable Resources, explains in a letter to Newcastle Council, “an increase in the supply of a commodity such as coal will reduce the price of the commodity, leading to increased demand, and therefore increased emissions”, and discourage industries investing in greener alternatives.

You can virtually attend the planning committee hearing, which starts at 0930 Friday 18.12.20 via www.youtube.com/watch?v=MiXPxStycTQ&feature=youtu.be