Page 29 - Insurance Times July 2023

and financial performance in the long term. This may involve Emerging risks: The insurance industry was already
adopting sustainable business practices, implementing beginning to see the impact of emerging risks such as cyber-
strong governance and risk management systems, and attacks and climate change on its operations and
engaging with stakeholders on ESG issues. underwriting practices.

The insurance industry has been facing a range of After the pandemic:
environment, social, and governance (ESG) challenges in the Changes in demand: The pandemic has led to significant
post-pandemic environment. Some of these challenges changes in demand for certain types of insurance coverage.
include: For example, demand for travel insurance has declined
Climate change: The insurance industry is facing significantly due to travel restrictions, while demand for
increased risks due to climate change, such as more health insurance and business interruption insurance has
frequent and severe natural disasters. Insurance increased.
companies need to adapt to these changes and consider
Financial impact: The pandemic has also had a financial
their exposure to climate-related risks in their
impact on the insurance industry, with some companies
underwriting and investment decisions.
experiencing higher claims payouts due to the increased
Social issues: The pandemic has highlighted social
frequency of natural disasters and other events. In addition,
inequalities and the need for more inclusive and
the value of certain investments held by insurance
sustainable business practices. Insurance companies are
companies may have been affected by market volatility. The
under pressure to address social issues such as diversity,
pandemic has also highlighted a number of ESG risks facing
equity, and inclusion in their operations and supply
the insurance industry, including risks related to climate
chains.
change, social issues, and governance.
Governance challenges: The pandemic has also
highlighted the importance of strong governance and Steps by insurance companies to meet
risk management in the insurance industry. Companies
ESG goals
are being scrutinized for their decision-making and risk
There are a number of steps that insurance companies can
management practices, and there is a need for greater
take to meet their ESG goals and address the challenges
transparency and accountability.
facing the industry:
Changing customer needs: The pandemic has also led
1. Incorporate ESG considerations into underwriting
to changes in customer needs and preferences, which and investment decisions: Insurance companies can
may require insurance companies to adapt their consider environmental, social, and governance factors
products and services in order to meet these changing in their underwriting and investment decisions in order
needs. to manage risks and support sustainable business
practices.
Companies need to be proactive in addressing these
2. Develop and implement sustainability policies:
challenges in order to maintain the trust and confidence of
Insurance companies can develop and implement
their stakeholders.
sustainability policies that outline their commitments to
addressing ESG issues and set targets for improving their
Insurance sector before and after the
environmental and social performance.
pandemic 3. Engage with stakeholders: Insurance companies can
The insurance industry has been impacted by the COVID-19 engage with stakeholders, including customers,
pandemic in a number of ways. Some of the key ways in employees, and investors, to understand their ESG
which the insurance sector has been affected before and concerns and preferences and to ensure that their
after the pandemic include: business practices align with these expectations.
4. Disclose ESG information: Insurance companies can
Before the pandemic: transparently disclose information about their ESG
Strong financial performance: Prior to the pandemic, the performance and practices to stakeholders, including
insurance industry was generally experiencing strong through the use of sustainability reporting frameworks
financial performance, with rising premiums and profits. such as the Global Reporting Initiative (GRI).

26 July 2023 The Insurance Times