Climate Contract Playbook Edition 3
150
1. Policyholders across multiple sectors and industries 2. Directors and Officers
3. Shareholders 4. Underwriters 5. Insurance brokers 6. Risk managers
Stakeholders
7. Legal and compliance advisers 8. Financial regulatory authorities
9. Pressure groups 10. Litigation funders
Holding Policyholders to this standard will link directors’ duties and corresponding litigation risks for: failure to disclose financial risk; failure to mitigate greenhouse gases; failure to adapt investment strategies; and failure to comply with climate regulations. There is scope for the clause to be tailored (by including industry-specific standards, particularly on metrics and targets) to the individual Policyholder’s specific business/climate-related risks affecting that business. The onus is on the Policyholder to claim the premium adjustment through supplying evidence of compliance with the standards. There is no need for the Insurer to undertake an onerous qualitative assessment or appraisal of the Policyholder’s actions, which may require industry or project specific knowledge. We have sought to make Archie’s clause as simple and sellable as possible, to effect change on big D&O accounts, and increase the likelihood of Insurers and Insureds adopting the clause. Whilst Archie’s clause has been worded for a D&O policy, there would be scope for future development and application to other types of policy. Similarly, the clause can be amended to suit the needs of the Policyholder, for example, with cover on a specific project. The clause allows for decision-making between the Insurer and Policyholder regarding: • the level of premium return; • how compliance will be judged (i.e. the documents to be furnished on the
Application
Notes for users
Insurer at the time of claiming the adjustment); and • whether any further standards should be included.
The wording was drafted to be suitable for the global market. Insurers/ Policyholders may wish to amend wording to accord with Lloyd’s Market Association standard wording for premium adjustment, where applicable.
Definitions Annual Accounts means the annual accounts prepared from the Policyholder’s financial records at the end of its financial year. Claim means written demands, civil or criminal proceedings, extradition proceedings, regulatory or administrative proceedings against the Policyholder for actual or alleged wrongful acts [, including negligence, misstatements, default, breach of duty or breach of trust]. Climate Change Mitigation means human intervention or efforts to reduce the sources or enhance the sinks of Greenhouse Gas Emissions. Declaration means the document at Appendix 1.
Made with FlippingBook - professional solution for displaying marketing and sales documents online