Insurers face realignment
Insurers face realignment
The issue of environmental protection and sustainability is not new, it having been a subject of political debate even thirty years ago. The Paris Accords in 2015 pushed it further up the agenda for good.
When it comes to the ESG (Environment, Social and Governance) sustainability framework, the insurance industry still seems to be focussing very heavily on the "E" for environment . A distinction has to be made here between insurers who actually want to become "green" and those who use the issue of "sustainability" as a pretext for restricting their insurance coverage. The latter affects in particular industrial companies seeking to make their business models sustainable while developing their own sustainability DNA.
Markets remain challenging
The accumulation and increasing intensity of claims in many lines have led to a significant hardening of the market in recent years. As a consequence, premiums have increased, terms and conditions have worsened, (silent) cyber and pandemic clauses have been muddled together and capacities reduced. This trend is being exacerbated by the restrictions imposed as part of the ongoing debate about sustainability. Risk carriers have to reconcile the sustainability of their own business processes, investments, risk policies and product design with the goals they have committed themselves to. In so doing, it’s still important to continue to fulfil the overall economic mandate: the provision of insurance cover and support to help customers transform.
Risk carriers have to reconcile sustainability within their own companies with the goals they have committed themselves to.
The sustainability debate isn’t going to go away. In fact, it’s more likely to intensify, ultimately meaning the imposition of even more limitations and restrictions on customers. This will be true for at least as long as the requirements set by risk carriers exceed those approved by law. For their part, customers expect risk carriers not only to fulfil their overall responsibility, but, at the same time, to provide risk coverage for the various industries in order to facilitate economic activity and growth in the future. All in all, the ongoing sustainability debate gives the question of the relevance of industrial insurance new meaning.
Areas of businesses potentially affected by ESG concerns
- Responsibility for natural resources
- Climate-friendly behaviour
- Environmental protection
- Energy conservation
- Waste disposal & recycling
- Respect for animal welfare
- Occupational health and safety for employees
- Equal opportunities and pay
- Social commitment
- Product responsibility
- Compliance with human rights (including suppliers)
- Responsible data handling
- Sustainable corporate governance
- Promotion and establishment in corporate culture
- Appropriate pay
- Active measures to combat corruption and undue advantage
- Disclosure and transparency
- Sustainable financing