Who is insuring exploratory drilling in The Bahamas, and why?
Update (Jan 22, 2021): Having previously said they had no record of insuring BPC’s ill-conceived offshore oil drilling project, Lloyd’s has now admitted they are providing insurance. We can understand why Lloyd’s would have been embarrassed to admit they are insuring this project. New oil and gas projects are completely incompatible with limiting global warming to 1.5C. Lloyd’s need to do better. They published their first ESG report in December, but clearly have a long way to go to become a truly sustainable insurance market. Insure Our Future is now calling on Lloyd’s to review and revoke its decision to insure this ill-conceived and dangerous project.
Statement by Insure Our Future, in support of the Our Islands Our Future coalition, calling upon the Bahamas Petroleum Company (BPC) and Lloyd’s of London to clarify their contradictory statements in which the BPC says some of its insurance is with Lloyd’s of London, and Lloyd’s says it has “no record that this risk is being underwritten in the Lloyd’s market”.
The following matters have been brought to our attention:
- Exploratory off-shore oil drilling in the Bahamas by Bahamas Petroleum Company (BPC), an Isle of Man registered company, commenced in December 2020.
- Oil drilling poses multiple serious climate, environmental and governance issues, including concerns about insurance coverage.
- 150 organisations and businesses, as part of the coalition “Our Islands Our Future”, are campaigning against the BPC project, and over 90,000 people have signed a petition to stop the drilling.
- 18 Members of the U.S. Congress recently wrote a letter to the Prime Minister of the Bahamas, Dr. Hubert Alexander Minnis, “expressing opposition to the Bahamas Petroleum Company’s (BPC) offshore drilling project.”
- In January 2021, Lloyd’s clearly stated in an email to the Bahamas Reef Environment Educational Foundation (BREEF) that at present it has no record that this risk [insuring the BPC] is being underwritten in the Lloyd’s market.
- In response to Our Island Our Future publishing Lloyd’s statement, BPC re-asserted that “All necessary insurance cover had been secured through Aon UK, with insurers from Lloyd’s of London and other international markets underwriting it.”
Since 2017, the Insure Our Future network has been engaging the global insurance industry and demanding that insurers bring their underwriting and investment policies in line with climate science and the Paris Agreement. Many insurers have already started to take action by stopping underwriting and investment in new coal, tar sand and Arctic oil projects, including Lloyd’s, which announced its first ESG policy on December 16, 2020.
These policies are just the first step. The next step that Insure Our Future is advocating for the insurance sector to take, and on which some are already engaged, is to stop underwriting and investing in new oil and gas exploration and production. New oil and gas projects are completely incompatible with limiting global warming to 1.5°C. Insurance companies, as society’s risk managers, have a responsibility to stop insuring and investing in new oil and gas to avoid unmanageable climate breakdown.
Regardless of insurance provision, this new off-shore exploratory oil drilling project in the Bahamas should not go ahead due to the multiple serious climate, environmental and governance issues it presents.
In the meantime, whether or not Lloyd’s insures the oil drilling that has already commenced must be clarified. Lloyd’s Head of Responsible Business, acting on behalf of Lloyd’s CEO John Neal, responded to clear enquiries about insurance cover for BPC by stating that “At present we don’t have any record that this risk is being underwritten in the Lloyd’s market.” Lloyd’s was given notice of the intention to publicise its statement and to highlight the apparent contradiction with BPC statements, and also was given the opportunity to comment further prior to publication, but chose not to do so.
In response to Our Island Our Future publishing Lloyd’s statement and noting the contradiction with what BPC has previously said, BPC’s CEO Simon Potter responded with the heavy handed accusation of “gross misrepresentation of basic facts” by the campaign group, and re-asserted that “All necessary insurance cover had been secured through Aon UK, with insurers from Lloyd’s of London and other international markets underwriting it.” He also stated that no one individual can attest to speak on behalf of Lloyd’s as a whole.
John Neal and/or Bruce Carnegie-Brown, the chair of Lloyd’s Council, have a clear moral responsibility to clarify whether or not any aspect of this exploratory oil drilling in the Bahamas is being insured in the Lloyd’s market. If Lloyd’s is insuring BPC, it needs to explain its previous statements and how insuring this project fits with the vision of “responsible underwriting and investment to help accelerate society’s transition from fossil fuel dependency, towards renewable energy sources”, which it stated in its new ESG policy.
Meanwhile, the Bahamas Petroleum Company (BPC) openly contradicts Lloyd’s statement, yet refuses to publish the evidence that it actually has insurance coverage with one or more Lloyd’s syndicates. Citizens, other affected companies, and representative organisations surely have a right to know and a right to expect to be provided with evidence that insurance is in place. The bluster and insults traded by BPC are no substitute for evidence. BPC should simply produce the certificate of insurance, now.
Overall, this ill-conceived project threatens environmental destruction and climate disaster. We call on the government of the Bahamas to transparently provide all documentation relating to this project and take urgent action to halt the drilling.