Pension and insurance firms endorse blended finance model

Pension and insurance firms have voiced support for a public-private blended finance model designed to mitigate investment risks and drive billions in private finance into environmentally friendly infrastructure. This initiative follows the ABI’s Investment Delivery Forum’s (the Forum) announcement of a 10-point action plan for investment, which includes the design of a novel funding model to stimulate private investment in the UK’s critical infrastructure.

A new funding model for EV charging networks

The Forum’s plan emphasises the creation of a national EV-charging network. Developed in collaboration with the Green Finance Institute (GFI) and His Majesty’s Treasury’s blended finance team, the funding model aims to leverage public investment to catalyse substantial private investment.

“Public support would be used to mitigate the initial risk in new infrastructure that private investors are unable to take,” explains Rhian Mari-Thomas, chief executive officer of the GFI. The report estimates that less than £1 billion of public investment over 15 years could spur up to £20 billion of private investment in the EV charging network, fostering economic growth and addressing the current lack of EV infrastructure in remote locations.

Expanding investment horizons

Beyond EV charging networks, the Forum’s action plan includes a focus on nuclear energy and offshore wind investments. The Forum, comprising some of the UK’s largest pension firms and insurers, aims to unlock £100 billion for productive assets over the next decade through the reformation of the Solvency II regime.

“The work done by the Forum on new funding models, such as the EV charge point programme, is essential to facilitate the flow of private capital into the green infrastructure transition,” states Baroness Nicky Morgan, chair of the Investment Delivery Forum.

Regional and technological expansion

The Forum’s report also outlines plans for broader regional engagement. Initially focused on Manchester and the north west, the engagement strategy will expand to West Yorkshire, Liverpool, Wales, and Scotland by 2024/25. This expansion aligns with the Forum’s commitment to channel £100 billion into productive assets, as highlighted by Hannah Gurga, director general of the Association of British Insurers: “The Investment Delivery Forum has laid firm foundations for the industry to act on the opportunity that reforming the regulatory framework brings.”

The Forum will also explore investments in emerging technologies like carbon capture and small nuclear reactors. These initiatives align with longer-term aims to invest in floating offshore wind projects and enhance the UK’s energy infrastructure.

Tracking and regulatory engagement

Starting January 1, 2025, the Forum will track and report on investments made under the new Solvency UK regulatory regime. This initiative aims to detail the total investments and the specific projects being funded. Further regulatory engagement will continue, with the Forum investigating options to enhance the Prudential Regulation Authority’s (PRA) approval processes via an investment accelerator or project sandbox.

Economic secretary to the Treasury Tulip Siddiq expressed strong support for the Forum’s efforts: “I welcome the final report of the Investment Delivery Forum, which sets out a clear plan to deliver on the £100 billion pledge insurers have made to invest in critical UK infrastructure.”

Conclusion

The Forum’s 10-point action plan and its new funding model represent significant steps toward mobilising private finance for green and good infrastructure in the UK. By leveraging public investment to reduce initial risks, the Forum aims to attract substantial private capital, driving economic growth and helping the UK meet its net zero targets. As Baroness Nicky Morgan aptly put it, “Members of the Forum stand ready to act to accelerate the nation’s investment into green and good infrastructure.”

In the words of Rhian Mari-Thomas, “Partnership is essential if we are going to meet our net zero targets in the UK.” The collaborative efforts of public and private sectors will be crucial in achieving these ambitious goals.

Image: Canva.

Emma Cockings Emma is a content editor for Claims Media. Emma is a experienced writer with a background in client-centric personal injury for a major firm. She has attended and reported on multiple brokerage events throughout her career.