In January, we reported on work being done by the Global Health Risk Facility, a public-private collaboration formed by Lloyd’s to help protect and support the storage and transportation of critical medical supplies, including temperature sensitive COVID-19 vaccines as they are rolled out across emerging markets globally.
Anchored by Syndicate 1796, the GHRF provides “all-risk” cargo coverage for the transportation and storage of all COVID-19 global health products to developing countries. The syndicate is operated by Parsyl Insurance, a tech-driven cargo insurer, with Ascot Group as the lead underwriter for the facility.
We spoke with Hank Watkins, president of Americas at Lloyd’s, for an update on the GHRF, other products that have been developed in response to the pandemic, and how Lloyd’s is addressing another challenging risk—climate change.
Q
Give us any updates on the GHRF and lessons learned during the past 10 months.
A
The past ten months have confirmed that effective vaccine distribution in the developing world is enormously challenging. While supply of Covid-19 vaccines to these areas is slowly improving, still only around 1% of people living in low-income countries have received even one dose of a Covid-19 vaccine. Where there is supply, there have been reports of vaccine stockpiles going unused or spoiling due to limitations in infrastructure.
Early customers have reported that what the GHRF uniquely provides is an insurer who grasps the risks associated with distribution in the developing world and develops solutions to help overcome those risks, strengthening these critical supply chains now and into the future.
Q
What new solutions have been developed to specifically mitigate risks from COVID-19? And what effects have those solutions had on the insurance industry as a whole?
A
Throughout the global pandemic the insurance industry has innovated and reassessed its approach to systemic risk. Earlier in the summer, Lloyd’s collaborated with the UK government and industry partners to launch a ‘Live Events Reinsurance Scheme’. It aims to give the events industry a boost through a £750mn risk transfer mechanism to help companies plan events with confidence going into 2022. This is but one example of the societal benefit achievable through private-public partnerships.
Q
What additional actions can insurers and brokers take to mitigate risks during- and post-COVID-19?
A
COVID-19 has demonstrated that there is much more we can do to help businesses and communities reduce the risks they face, enable them to recover quickly, and provide them security to innovate and drive economic growth.
We recognize these challenges at Lloyd’s – and we recognize that no one person, organization, public or private sector entity has all the answers. We believe in the power of a collaborative approach and we know that Lloyd’s, with its unique position at the heart of the global (re)insurance sector, is extremely well placed to convene a global community of risk experts. We’ve done just that through our Futureset program, with the goal of sparking innovation, building understanding, and driving forward new solutions.
Throughout 2021, Futureset has explored the landscape of systemic risks, including lessons learned from the COVID-19 pandemic, as is examining the growing and global risks brought about by climate change. Futureset is convening global experts and partners with world class research organizations to create new and pioneering insights to drive sustainable solutions to current and future threats around the world.
Q
Lloyd’s has recently brought together insurance leaders to form an Insurance Task Force (ITF) as part of the Sustainable Markets Initiative (SMI). Give us a brief insight on the initiative, the ITF and its goals.
A
The Sustainable Markets Initiative Insurance Task Force, convened by His Royal Highness (HRH) the Prince of Wales and chaired by Lloyd’s, is comprised of executives from many of the world’s largest insurance and reinsurance companies. It provides an influential platform for the sector to collectively advance the world’s progress towards a resilient, net-zero economy.
The task force is committed to helping create a more sustainable future through the risks we manage and the capital we invest. Currently the SMI is focused on: 1) driving insurance product and services innovation; 2) implementing sustainable processes across the insurance supply chain; 3) establishing a public-private disaster resilience, response, and recovery framework to help protect developing nations from the evolving economic and societal impacts of climate change; 4) developing a framework for accelerating and scaling sustainable investment by the global (re)insurance industry; and 5) defining the industry’s ability to enable multi-sector transitions.
Q
What is the obligation that the industry has with regard to its employees, shareholders and the world itself, when it comes to creating a sustainable future?
A
At Lloyd’s we are committed to accelerating the transition to net zero by building a more sustainable insurance marketplace. Our Environmental, Social and Governance (ESG) report sets out our commitments to align both the Corporation and the market with the United Nations’ Sustainable Development Goals and the Paris Agreement. Lloyd’s is committed to working with the market to support efforts to integrate ESG principles into business activities. And we are here to support all our stakeholders as we confront these issues together, and as we build back better from the pandemic.
Q
The ITF has committed to launching at least two new insurance products to enable growth in priority industries. Tell us more about the type of products being developed.
A
Two areas of focus are wind turbines and hydrogen.
The global offshore wind market is evolving rapidly, and technology innovation will be key to driving growth as the sector matures. At Lloyd’s we believe the insurance market has an important role to play and a unique opportunity to further expand the coverage it provides to the offshore wind sector to meet the demand for additional insurance capacity, which is being driven by the rapid advancement of new offshore wind technology including turbines and floating wind technology.
Hydrogen fuel, although in its early stages, has the potential to become a key enabler in accelerating the decarbonization of a range of sectors, particularly now as the cost of renewable power has declined and electrolysis technology has improved. Consequently, one important area of focus for us is to support and accelerate the deployment of green hydrogen globally. The Lloyd’s market is already providing specialist insurance cover for safety risks associated with the transportation of hydrogen. Such cover will likely need to be scaled, particularly as the modification of existing gas transmission pipelines continues to gather pace.
Q
How can the industry use the SMI objectives as a source of inspiration and meaning for employees today, but also in new sources of talent?
A
There has been a focus on these broader areas for some time – what Lloyd’s has been able to achieve with our ESG report and our climate action commitments is to consolidate it, providing a source of meaning and inspiration for all our employees today and the new talent of tomorrow. Lloyd’s biggest strength has always been its collaborative spirit. ESG is now enshrined in our purpose. We are showing leadership and setting ourselves at the forefront of the industry. Our conversations with customers, employees, and business partners include sustainability of the climate ecosystem, and inclusion talking points, actions we believe promote ESG as one of the largest opportunities our industry has ever faced.
Q
What actions can smaller insurers and brokers take to assist in accelerating the world’s transition to a sustainable future?
A
Everyone can play a role, with smaller insurers and brokers moving more quickly in some cases to capitalize on new trends in emerging industries and technologies. This has always been a strength of the Lloyd’s market and as new risk transfer and investment solutions are required to support the move to a more sustainable environment, innovating to support our collective success will remain a core theme of our market.
