The Critical Role of Brokers in the Energy Transition
The global energy transition is reshaping industries, presenting new challenges for the insurance sector. According to the Lloyd’s Market Association (LMA), brokers are essential in facilitating long-term relationships between insurers and clients as they navigate these changes. Paul Davenport, Finance & Risk Director at LMA, highlighted the need for innovative insurance structures to accommodate the complex risks associated with net-zero projects.
“Brokers are critical in helping underwriters understand their clients’ transition pathways,” Davenport said. “They’re in the best position to translate a client’s sustainability journey into meaningful, actionable insight for insurers.” The LMA advocates for a shift from the traditional annual policy renewal model to multi-year strategic engagement, enabling better long-term risk planning and innovation.
One major hurdle is the lack of standardized, quality data. To address this, the LMA has developed a set of 22 ESG-related questions to help brokers collect consistent data from clients. This standardization aims to improve communication between brokers, clients, and insurers, allowing for more tailored product development.
“Underwriters only have so much time to devote to each client,” Davenport explained. “Standardized, high-quality transition plans help insurers understand a client’s direction, anticipate future risks, and engage more effectively.”
The insurance industry has begun responding to the energy transition with innovative products like parametric insurance and performance guarantees. However, Davenport stressed that insurers need the freedom to develop their own strategies and approaches to the net-zero shift.
Brokers are uniquely positioned to connect the dots between clients and insurers, facilitating strategic partnerships that go beyond risk transfer. As the energy transition continues, their role will become increasingly critical in shaping how the insurance market supports this global shift.
“There’s massive investment going into infrastructure to transition from fossil fuels to a more electrified economy,” Davenport said. “Brokers can play a huge role in enabling long-term thinking and helping create continuity in relationships.”
