LMG report highlights role of insurance in unlocking net-zero potential

The role of the London Market in unlocking, promoting and facilitating the transition to net zero has been highlighted in a new report from the London Market Group (LMG) aimed at parliamentarians and other influencers. Sean McGovern, chair of the LMG and CEO of AXA XL, UK & Lloyd’s, said: “The transition to a net-zero world will affect our clients’ business models, product needs and risk characteristics. While people often talk about green finance as the main driver of these projects, insurance is a crucial but often overlooked partner.” He continued: “In this report, we break down the challenges faced by investors, developers, and other stakeholders across the life cycle of any such green project to illustrate where and how insurance can be used to alleviate them – from the conception of an idea, securing financing, construction, operations and, where necessary, dismantling or re-purposing.” McGovern added: “Insurance isn't merely an occasional player; it is a dedicated partner. These endeavours require consistent and multi-faceted support and, with its vast expertise in managing risks across diverse sectors, the insurance industry is well positioned to foster confidence in green projects throughout their lifespan.” The LMG said that the London Market has shown it can use its scale, expertise, and history of innovation to help unlock the vision for a sustainable future, whether through specialised versions of traditional insurance products or innovative solutions to tackle new complex risks. For example, the report notes that the transition to net zero needs continuous innovation of new green technologies and initiatives. However, inventors and innovators face the risk that their ideas could be copied or stolen by competitors, and sustainable technologies face even greater intellectual property challenges due to their global nature and collaborative development processes. “Insurance offers a solution,” says the report. “IP policies can offer financial protection, covering litigation costs for defending patents, trademarks, and copyrights. They also shield against claims of patent infringement or trade secret misappropriation. Ultimately, by safeguarding the value of intellectual property – a key innovation driver – insurance helps to promote the invention of new green solutions and helps to attract more players to the green tech sector.” The LMG report also notes that a number of insurers have developed innovative insurance solutions that protect investors and lenders against financial losses when investing, unlocking financing for green projects. It adds that the insurance solutions applied during the construction and ongoing operation of green projects also help to secure financing by ensuring the projects run smoothly. The report was written by Oxbow Partners, drawing on interviews with a broad representative group within the London Market – including brokers, syndicates and company market insurers – to gain their insights, perspectives, and case studies of how insurance has supported projects across each stage of the life cycle.

LMG report highlights role of insurance in unlocking net-zero potential

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