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The Principles

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Our aspiration

The insurance industry’s core business is to understand, manage and carry risk. We depend on the trust people place in our industry to fulfil its obligations.Through risk prevention and risk reduction and by sharing risks over many shoulders, the insurance industry helps protect society, fosters innovation and underpins economic development. These are key contributions to a well-functioning and sustainable society.

The insurance industry has the responsibility of providing quality and reliable products and services. This responsibility includes working with our clients and business partners to understand and manage risks that are or can be material to the insurance business.

Our world is facing increasing environmental, social and governance (ESG) challenges. This changing risk landscape is leading to diverse, interconnected and complex risks, and presents new opportunities. Accordingly, we believe it is prudent for the insurance industry to adjust the range of risk factors considered in managing its business.ESG issues are increasingly influencing traditional risk factors and can have a significant impact on the industry’s viability.Therefore, a resilient insurance industry depends on holistic and far-sighted risk management in which ESG issues are considered.

As risk managers, risk carriers and investors, the insurance industry has a vital interest and plays an important role in fostering sustainable economic and social development. We believe that better management of ESG issues will strengthen the insurance industry’s contribution to building a resilient, inclusive and sustainable society. However, many ESG issues are too big and complex and need widespread action across society, innovation and long-term solutions.

Therefore, it is our aspiration to build on the foundation the insurance industry has laid in supporting a sustainable society.The future we want is a society in which people are aligned and incentivised to adopt sustainable practices. To realise this aim, we will use our intellectual, operational and capital capacities to implement the Principles for Sustainable Insurance (the ‘Principles’) across our spheres of influence, subject to applicable laws, rules and regulations and duties owed to shareholders and policyholders.

Sustainable insurance is a strategic approach where all activities in the insurance value chain, including interactions with stakeholders, are done in a responsible and forward-looking way by identifying, assessing, managing and monitoring risks and opportunities associated with environmental, social and governance issues. Sustainable insurance aims to reduce risk, develop innovative solutions, improve business performance, and contribute to environmental, social and economic sustainability.

Principle 1		We will embed in our decision-making environmental, social and governance issues relevant to our insurance business. Possible actions: Company strategy Establish a company strategy at the Board and executive management levels to identify, assess, manage and monitor ESG issues in business operations Dialogue with company owners on the relevance of ESG issues to company strategy Integrate ESG issues into recruitment, training and employee engagement programmes Risk management and underwriting Establish processes to identify and assess ESG issues inherent in the portfolio and be aware of potential ESG-related consequences of the company’s transactions Integrate ESG issues into risk management, underwriting and capital adequacy decision‑making processes, including research, models, analytics, tools and metrics Product and service development Develop products and services which reduce risk, have a positive impact on ESG issues and encourage better risk management Develop or support literacy programmes on risk, insurance and ESG issues Claims management Respond to clients quickly, fairly, sensitively and transparently at all times and make sure claims processes are clearly explained and understood Integrate ESG issues into repairs, replacements and other claims services Sales and marketing Educate sales and marketing staff on ESG issues relevant to products and services and integrate key messages responsibly into strategies and campaigns Make sure product and service coverage, benefits and costs are relevant and clearly explained and understood Investment management Integrate ESG issues into investment decision-making and ownership practices (e.g. by implementing the Principles for Responsible Investment)
Principle 2		We will work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions. Possible actions: Clients and suppliers Dialogue with clients and suppliers on the benefits of managing ESG issues and the company’s expectations and requirements on ESG issues Provide clients and suppliers with information and tools that may help them manage ESG issues Integrate ESG issues into tender and selection processes for suppliers Encourage clients and suppliers to disclose ESG issues and to use relevant disclosure or reporting framework Insurers, reinsurers and intermediaries Promote the adoption of the Principles Support the inclusion of ESG issues in professional education and ethical standards in the insurance industry
Principle 3		We will work together with governments, regulators and other key stakeholders to promote widespread action across society on environmental, social and governance issues. Possible actions: Governments, regulators and other policymakers Support prudential policy, regulatory and legal frameworks that enable risk reduction, innovation and better management of ESG issues Dialogue with governments and regulators to develop integrated risk management approaches and risk transfer solutions Other key stakeholders Dialogue with intergovernmental and non-governmental organisations to support sustainable development by providing risk management and risk transfer expertise Dialogue with business and industry associations to better understand and manage ESG issues across industries and geographies Dialogue with academia and the scientific community to foster research and educational programmes on ESG issues in the context of the insurance business Dialogue with media to promote public awareness of ESG issues and good risk management
Principle 4		We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the Principles. Possible actions: Assess, measure and monitor the company’s progress in managing ESG issues and proactively and regularly disclose this information publicly Participate in relevant disclosure or reporting frameworks Dialogue with clients, regulators, rating agencies and other stakeholders to gain mutual understanding on the value of disclosure through the Principles