During London Climate Action Week 2024, our team of experts joined forces  with senior leaders. Their goals was to explore the complexities of integrating equity finance, banking, investment, and insurance to derisk and scale climate finance.

In this video, Anthony Bice, partner and head of climate and sustainability for our Insurance and Asset Management Practice, speaks to Rachel Turk, chief underwriting officer at Lloyd’s of London, about the challenges and opportunities in their field.

Discover how enhanced collaboration and strategic alignment across sectors can accelerate capital deployment and drive the transition to a sustainable future.

Anthony Bice

Hi, I'm Anthony Bice, head of Climate and Sustainability for Oliver Wyman's Insurance and Asset Management Practice. And I'm here today with Rachel Turk, who's the chief underwriting officer at Lloyd's of London.

Rachel, we've just had a really interesting conversation with representatives from insurance, from banking and from the energy sector about how we can collectively come together to de-risk the climate transition.Interested in your takeaways and your thoughts on that.

Rachel Turk

Yeah, thank you. I mean, it was such a fascinating conversation and it was so interesting to have a client in the room. Because I think sometimes that's what we miss. We sit there and talk about it either in our industry, in insurance or finance, or even coming together and forget about the end client. If we can start with the client and think about their problems and challenges, we have a better chance of thinking through what a climate transition looks like and how to help the clients.

For me, the key takeaways were: talk to the clients, don't assume, find out what they actually need from us. They're not risk experts, we are. We're not a panacea for all risks. We need to be clear on our appetites, what we can and cannot insure. We might not know the limits of everything, but we know our red lines. We need to be clear we can't do everything. We need to be better at working with our counterparts. We've often had lines between insurance and finance, but we're fundamentally looking at the same risks. Within the bounds of competition law, we can do more to collaborate and share, to go to market together to provide solutions for clients rather than it being banking goes first and then insurance gets pulled in at the last minute or vice versa.

Anthony

Yeah. And it's such a multi-community issue, right? We need equity finance, we need early stages finance, we need banking, we need insurance, and so on. This concept that came through in the conversation of the need for somebody to conduct the orchestra, I thought was a really interesting one because I think we are all a little bit guilty of just dealing with our own path of the bullet. And as a result, there's probably a lot of overlaps.

There's probably a number of things we’re doing from a client’s perspective, multiple times. Because we each need to do our own risk assessment and our own underwriting and so on. So this idea of can we bring everyone together, not even at the early stages of a project, but actually bring everyone together before we even start to think about projects. You know, maybe we can aggregate some of the opportunities, some of the risks together and create a little bit more of a standardized playbook. There was a lot of, I think a lot of acceptance and a lot of encouragement for that kind of structure.

Rachel

I completely agree. And when we think about the skills required for this, yes, they're developing quickly within the sectors, but there's still a finite number of people that might be truly skilled in climate transition. And so we're all chasing after the same pot of people. So whatever we can do to collaborate together to share the knowledge, to share the experience, work with clients, etcetera, as I said, I think will accelerate our abilities in this space.

Anthony

Yeah, and the other thing that I thought was really interesting was the concept of the time dimension. And there were two elements of this. One is: any project, any development, over time is going to have different financing needs, is going to have different insurance needs. And we need to be thinking from the outset about that time dimension. But also what we really heard was how critical time is in terms of getting to decisions and actually releasing the funding. We're talking oftentimes about businesses where every day matters and I think we can also be a little bit, guilty maybe is not quite the right word, of working to our own timescales rather than our clients. But at the same time, again, there's probably a lot of things that could be standardized so that we don't have to spend the example that we heard, five days out of seven negotiating an NDA, whereas where we could actually be working on the underwriting or the lending.

Rachel

Completely agree. And interestingly the failure of small business or of enterprises, that timeliness goes across, this isn't just a climate transition issue, this is a general, broader societal problem. Speed of financing, speed of decision making is what really impacts on small business or medium-sized enterprises. But it really came through here that when you're trying to do new technologies, understand the risks, every day counts. And we might be sitting there saying go, well we're not so sure and we've got to get through a risk committee or an underwriting committee, or a credit committee, etcetera. Or clients aren't running to the same tune that we are and they're not under the same cadence that we are and that we've got to be really respectful of their timelines.

And I think a lot of that comes from earlier engagement and not too early. Because if you engage too early and so that the conversation isn't progressed enough, then you end up sort of floundering around. And if you're too late, you spend five days out of the seven that you've got negotiating an NDA. So it's engaging at the right time and early enough in the process that we have the time to do the due diligence that we need to do, because we can't just be taking risk without any thought. We need to do the due diligence, but we need to do it in a way that's collaborative and has the end customer in mind.

Anthony

Yeah. And that point around we can't be taking risk without thought. I think one of the other things that came through the conversation really clearly was ultimately this has to be done on commercial terms. We all have ambitions to do the right thing. You know, sustainability is a very noble cause and most companies that we collectively deal with have ambitions, but at the end of the day, if it's not commercial then it's not sustainable to the industry. Whether that's insurance, whether that's banking. So how do we make sure that we get this on a commercial footing as well?

Rachel

Yeah, that was one of the key points and it is interesting when we talk about the ambitions that we have in the sector and I think about what some of the things I've tried to do at Lloyd's, of enabling capacity to come together. We have to be, I completely agree, we have to be slightly braver and talk about how it needs to be commercial. And if ultimately a project is not commercial, then the project needs to be re-looked at. But we need equitable sharing as well of the reward and the risk reward piece between the various elements of financial services as well. And I think there's perceived inequity that insurance gets, sort of comes in at the last minute and gets the sort of the whatever's left. It is unhelpful when we're trying to work more collaboratively.

Anthony

So interested then, what you are doing at Lloyd's to try and help facilitate climate financing and climate transition?

Rachel

So, small steps at first. So we've created this transition risk code, which is really to create an environment in which the risk-takers feel more confident to take some risk in this area. And that's by having a differentiated oversight regime. So I can't sit there because I don't have a balance sheet. So I'm not taking the risk myself saying, I would think you should take x, y, z risks. I can create an environment where from oversight, from encouraging the business to come through that we can make Lloyd's the first choice for placing this sort of business. If there's more to come, there's more that we can do. I think from a cost side, from a capital side, this was the first step along that road to really make Lloyd's the go-to place for insuring the transition.

Anthony

And speaking of first steps, we came together today with a number of representatives, and I think there was a strong sense that the conversation itself was really valuable. And so we'll be looking to repeat this, and try and work on those cross-industry, cross-sector issues that ultimately will help unlock and release hopefully faster capital to support the climate transition. Great to have you with us today. Thanks very much for doing this and that's it.

Rachel

Yeah, thank you so much. Really great to have been involved. Thank you.

During London Climate Action Week 2024, our team of experts joined forces  with senior leaders. Their goals was to explore the complexities of integrating equity finance, banking, investment, and insurance to derisk and scale climate finance.

In this video, Anthony Bice, partner and head of climate and sustainability for our Insurance and Asset Management Practice, speaks to Rachel Turk, chief underwriting officer at Lloyd’s of London, about the challenges and opportunities in their field.

Discover how enhanced collaboration and strategic alignment across sectors can accelerate capital deployment and drive the transition to a sustainable future.

Anthony Bice

Hi, I'm Anthony Bice, head of Climate and Sustainability for Oliver Wyman's Insurance and Asset Management Practice. And I'm here today with Rachel Turk, who's the chief underwriting officer at Lloyd's of London.

Rachel, we've just had a really interesting conversation with representatives from insurance, from banking and from the energy sector about how we can collectively come together to de-risk the climate transition.Interested in your takeaways and your thoughts on that.

Rachel Turk

Yeah, thank you. I mean, it was such a fascinating conversation and it was so interesting to have a client in the room. Because I think sometimes that's what we miss. We sit there and talk about it either in our industry, in insurance or finance, or even coming together and forget about the end client. If we can start with the client and think about their problems and challenges, we have a better chance of thinking through what a climate transition looks like and how to help the clients.

For me, the key takeaways were: talk to the clients, don't assume, find out what they actually need from us. They're not risk experts, we are. We're not a panacea for all risks. We need to be clear on our appetites, what we can and cannot insure. We might not know the limits of everything, but we know our red lines. We need to be clear we can't do everything. We need to be better at working with our counterparts. We've often had lines between insurance and finance, but we're fundamentally looking at the same risks. Within the bounds of competition law, we can do more to collaborate and share, to go to market together to provide solutions for clients rather than it being banking goes first and then insurance gets pulled in at the last minute or vice versa.

Anthony

Yeah. And it's such a multi-community issue, right? We need equity finance, we need early stages finance, we need banking, we need insurance, and so on. This concept that came through in the conversation of the need for somebody to conduct the orchestra, I thought was a really interesting one because I think we are all a little bit guilty of just dealing with our own path of the bullet. And as a result, there's probably a lot of overlaps.

There's probably a number of things we’re doing from a client’s perspective, multiple times. Because we each need to do our own risk assessment and our own underwriting and so on. So this idea of can we bring everyone together, not even at the early stages of a project, but actually bring everyone together before we even start to think about projects. You know, maybe we can aggregate some of the opportunities, some of the risks together and create a little bit more of a standardized playbook. There was a lot of, I think a lot of acceptance and a lot of encouragement for that kind of structure.

Rachel

I completely agree. And when we think about the skills required for this, yes, they're developing quickly within the sectors, but there's still a finite number of people that might be truly skilled in climate transition. And so we're all chasing after the same pot of people. So whatever we can do to collaborate together to share the knowledge, to share the experience, work with clients, etcetera, as I said, I think will accelerate our abilities in this space.

Anthony

Yeah, and the other thing that I thought was really interesting was the concept of the time dimension. And there were two elements of this. One is: any project, any development, over time is going to have different financing needs, is going to have different insurance needs. And we need to be thinking from the outset about that time dimension. But also what we really heard was how critical time is in terms of getting to decisions and actually releasing the funding. We're talking oftentimes about businesses where every day matters and I think we can also be a little bit, guilty maybe is not quite the right word, of working to our own timescales rather than our clients. But at the same time, again, there's probably a lot of things that could be standardized so that we don't have to spend the example that we heard, five days out of seven negotiating an NDA, whereas where we could actually be working on the underwriting or the lending.

Rachel

Completely agree. And interestingly the failure of small business or of enterprises, that timeliness goes across, this isn't just a climate transition issue, this is a general, broader societal problem. Speed of financing, speed of decision making is what really impacts on small business or medium-sized enterprises. But it really came through here that when you're trying to do new technologies, understand the risks, every day counts. And we might be sitting there saying go, well we're not so sure and we've got to get through a risk committee or an underwriting committee, or a credit committee, etcetera. Or clients aren't running to the same tune that we are and they're not under the same cadence that we are and that we've got to be really respectful of their timelines.

And I think a lot of that comes from earlier engagement and not too early. Because if you engage too early and so that the conversation isn't progressed enough, then you end up sort of floundering around. And if you're too late, you spend five days out of the seven that you've got negotiating an NDA. So it's engaging at the right time and early enough in the process that we have the time to do the due diligence that we need to do, because we can't just be taking risk without any thought. We need to do the due diligence, but we need to do it in a way that's collaborative and has the end customer in mind.

Anthony

Yeah. And that point around we can't be taking risk without thought. I think one of the other things that came through the conversation really clearly was ultimately this has to be done on commercial terms. We all have ambitions to do the right thing. You know, sustainability is a very noble cause and most companies that we collectively deal with have ambitions, but at the end of the day, if it's not commercial then it's not sustainable to the industry. Whether that's insurance, whether that's banking. So how do we make sure that we get this on a commercial footing as well?

Rachel

Yeah, that was one of the key points and it is interesting when we talk about the ambitions that we have in the sector and I think about what some of the things I've tried to do at Lloyd's, of enabling capacity to come together. We have to be, I completely agree, we have to be slightly braver and talk about how it needs to be commercial. And if ultimately a project is not commercial, then the project needs to be re-looked at. But we need equitable sharing as well of the reward and the risk reward piece between the various elements of financial services as well. And I think there's perceived inequity that insurance gets, sort of comes in at the last minute and gets the sort of the whatever's left. It is unhelpful when we're trying to work more collaboratively.

Anthony

So interested then, what you are doing at Lloyd's to try and help facilitate climate financing and climate transition?

Rachel

So, small steps at first. So we've created this transition risk code, which is really to create an environment in which the risk-takers feel more confident to take some risk in this area. And that's by having a differentiated oversight regime. So I can't sit there because I don't have a balance sheet. So I'm not taking the risk myself saying, I would think you should take x, y, z risks. I can create an environment where from oversight, from encouraging the business to come through that we can make Lloyd's the first choice for placing this sort of business. If there's more to come, there's more that we can do. I think from a cost side, from a capital side, this was the first step along that road to really make Lloyd's the go-to place for insuring the transition.

Anthony

And speaking of first steps, we came together today with a number of representatives, and I think there was a strong sense that the conversation itself was really valuable. And so we'll be looking to repeat this, and try and work on those cross-industry, cross-sector issues that ultimately will help unlock and release hopefully faster capital to support the climate transition. Great to have you with us today. Thanks very much for doing this and that's it.

Rachel

Yeah, thank you so much. Really great to have been involved. Thank you.