Global guidance on the integration of environmental, social and governance risks into insurance underwriting « UNEP FI Principles for Sustainable Insurance

Global guidance on the integration of environmental, social and governance risks into insurance underwriting

1. Background

The insurance industry plays a key role in promoting economic, social and environmental sustainability as risk managers, risk carriers and investors.

At present, there is no global guidance for the insurance industry on the integration of environmental, social and governance (ESG) risks into insurance underwriting—the process of evaluating, defining and pricing insurance risks. While the banking industry has, for example, developed the Equator Principles as its ESG standard for project finance—a specific type of financing—there is no equivalent insurance industry ESG standard for any line of business.

This project is an opportunity for the insurance industry to identify and define ESG risks from an insurance underwriting perspective, how to prevent and reduce such risks, and uncover opportunities. It has evolved out of other PSI-related projects, starting from the first-ever global insurance industry survey on ESG issues and insurance in 2009.

2. Aims

The project aims to:

Engage insurance industry practitioners and stakeholders worldwide to identify key ESG risks, priority lines of business, and types of insurance coverage
Develop a shared understanding by the insurance industry on how to approach ESG risks
Benefit the economy, society, and the environment by encouraging the prevention and reduction of ESG risks
Contribute to building a sustainable financial system and support global policy frameworks such as the UN Sustainable Development Goals, Paris Agreement on Climate Change, Sendai Framework for Disaster Risk Reduction, and UN Guiding Principles on Business and Human Rights through improved risk management strategies and practices across the insurance industry

3. Team

The core project team currently includes:

Allianz (Co-Lead)
UN Environment’s PSI Secretariat (Co-Lead)
AXA
Generali
Grupo Segurador Banco do Brasil e MAPFRE
Munich Re
QBE
RSA Insurance Group
Santam
Swiss Re
Zurich Insurance Group
Temple University Fox School of Business
University of Technology, Sydney (UTS) Business School
West Chester University

For questions, please contact psi-underwriting@unepfi.org.

4. First-ever global survey on underwriting ESG risks in non-life insurance business

To develop global ESG guidance for underwriting that is fit for purpose, the PSI is carrying out a three-step global consultation process to get input from the insurance industry and key stakeholders.

First, since last year, we have conducted interviews and engaged with many underwriters across lines of business, brokers, risk engineers, loss adjusters and other insurance practitioners, as well as key stakeholders such as insurance regulators and supervisors, business and industry, civil society organisations, and academia.

Second, we have discussed this initiative at various PSI regional market events last year and this year, spanning Africa, Asia-Pacific, Europe, Latin America and North America.

The first-ever global online survey on underwriting ESG risks in non-life insurance business is the third and final phase of the global consultation process.

Access the global survey here.

The deadline to complete the survey is 6 August 2018.

The survey should take approximately 15 to 25 minutes to complete.

It is available in 10 languages: Arabic, Chinese (Simplified and Traditional), English, French, German, Hindi, Italian, Japanese, Portuguese, and Spanish.

Individual responses will be kept confidential and the results will be presented only in aggregate form.

Thereafter, we will start the process of drafting ESG guidance for non-life insurance underwriting, with the aim of launching such guidance in the first quarter of 2019.