Introducing Tierra Part II
In this second blog in the series on Tierra’s founding members, we follow up with an introduction to Tierra’s other key founder, Andrew Beechey, whose experience and insights have been instrumental in helping launch Tierra.
On the back of his successful and varied career in the credit risk insurance market - working globally for some of the largest players - Andrew established a wide network in the insurance world, many of whom are now friends. This network has been fundamental to the successful launch of Tierra and has helped us develop a strong client base over the first 18 months of our operations. We suspect that for many people in the insurance market Andrew doesn’t require much of an introduction, but hopefully you will find his views on some tricky questions insightful.
Before too long we hope we can add a third part and beyond to this blog series, as the company grows and new colleagues join us!
What motivated you to co-found Tierra?
Over the last few years, I’ve started to develop a deeper interest in the environment and in particular the issue of climate change. I took some time out to study the subject, via a masters program at Sussex University, following which I realised I wanted to devote the remainder of my career to doing something useful in this area.
Having spent 25 years working in the credit insurance market, I realised there was a lack of focus in the industry on supporting the projects needed to decarbonisation society. If the world is to get anywhere near the pathway required to keep warming below 1.5 or 2 degrees then more finance is going to be needed to support decarbonising projects and more insurance capacity will be required to help mobilise this finance. We felt this situation represented an opportunity to bring focused and dedicated capacity and expertise into the sector and as a result Tierra was born.
Where would you like Tierra to be in 10 years’ time?
We know that considerable levels of finance are going to be required to transform the energy sector and put it on a path to a low carbon future. The latest BNEF report puts this figure at $4.5 trillion per annum by 2030, which is a fourfold increase on the level of finance being deployed into the sector today.
To meet these financing targets, banks will need to distribute the risks they are taking on and this is where non-payment insurance plays a key role. By being focused on this market segment and being willing to take on some of the emerging risks that are inherent in this fast changing sector, Tierra can be a key partner for our banking clients and we can position ourselves front and centre in the energy transition.
So our vision for Tierra over the next decade is to become the first port of call for banks who are looking for insurance partners to help support their energy transition projects. If Tierra can grow to be a major player in this market, that will be a great start, but equally part of our mission is to demonstrate to others that focusing on green projects and the future, rather than fossil fuels of the past, can be a profitable business strategy. If we can achieve that and bring others along with us then I think that will be a really worthwhile achievement.
What’s your view on the Insurance industry’s ability to respond to the various challenges coming from Climate Change
Climate change should be the most important issue that the insurance market is focusing on today, but in some respects it’s not getting the attention it deserves. The industry faces twin challenges as a result of climate change and how it responds to each of them will dictate how it fares over the coming decades.
Firstly, the changing climate brings with it huge challenges in terms of emerging risks that need to be insured. But with the climate changing, the severity and frequency of these risks is also changing, rendering old risk models obsolete. Hopefully the industry can adapt and provide the vital cover that society needs. Otherwise we will be left with segments of society unable to obtain insurance, or unable to afford it, which will only exacerbate the growing inequalities we see today.
Added to this changing risk environment is the fact that large parts of industry are going to need to adapt and transition their businesses away from carbon-based technologies. This will require the insurance market to follow these trends and to be willing to cover the new risks associated with these emerging industries. We’re going to see an unprecedented pace of change in the next decade or so. How well the insurance industry will be able to respond to this challenge remains an open question.
What has surprised you most since launching the business?
It has been a fascinating journey since we launched Tierra over 18 months ago. I feel we have made much more progress in terms of market engagement than we could have hoped for in the short space of time we have been active.
One of the most pleasant surprises has been the strong level of engagement in the green agenda. I genuinely feel that many clients want to deal with us because of our focus on green projects and they want to support what we are trying to achieve. By being focused in this area we are able to provide clients with a unique level of service and expertise and I think we are seeing clients respond positively to this approach.
And I have also been pleasantly surprised by the variety of different projects we’ve been asked to insure. From generation technologies, like wind and solar, through battery storage to green ammonia it is clear a huge amount of finance is going into the energy transition. This is very encouraging and hopefully the variety will only grow in the coming years.
What do you see as the major obstacles and opportunities in achieving Net Zero?
We need the economy to undergo a fundamental transformation if we are to achieve a net zero world. The good news is that the technology exists to allow us to make major advances in terms of decarbonising most industries, but there are two key obstacles that could block this transformation.
The first is the lack of political will to help support the investment required. Governments need to provide the framework to force the transition, as it won’t happen if left to the market on its own. If you take the example of electric cars, governments have stepped in to put an end date on the sale of fossil fuel-based cars in most major economies, which is hugely accelerating the transition to electric vehicles. However, in many other industries governments are slow to get involved and the regulations and frameworks have not yet been put in place.
The other area we need to focus on is the “net” part of net zero. We know how to reduce emissions hugely over the next couple of decades, but we don’t have the correct incentives in place to ensure we can get rid of the residual emissions that will remain, even once we have become as carbon efficient as possible. This is not an easy issue to solve, and many solutions will be required, from emissions capture technologies to nature-based solutions etc. but underlying all of them is the need for governments to provide the regulatory framework and incentives to make sure they work properly.
What do you do to relax after a busy week?
I love to cook and so at the end of the week I like nothing better than digging out a recipe book and seeing what I can create for the weekend. The alchemy of cooking fascinates me, bringing together simple ingredients and turning them into dishes that are often surprisingly tasty is something that I find really rewarding. And my efforts usually get good reviews from my wife which makes it all the more worthwhile!
I also just love being outdoor. So whether that is hiking the beautiful countryside with my wife near where we live in Brighton or getting on my bike and roaming the trails in the South Downs National Park, I am definitely happiest when I can get some fresh air and get closer to nature.