Page 43 - Insurance Times February 2024

The Future of

Insurance: ESG as a

Cornerstone of

Sustainable

Rohit Boda
Underwriting Group Managing Director
J. B. Boda Group

As climate change, social inequality, and governance issues become increasingly prominent,
insurers are recognizing the need to integrate Environmental, Social, and Governance (ESG) factors
into their underwriting processes. This shift not only aligns with global efforts to address pressing
issues but also positions the insurance industry as a key player in promoting sustainability and a
fraternity who is concerned about their ESG goals.

I n an era marked by unprecedented environmental and In addressing these multifaceted challenges, it becomes
evident that a global perspective is essential for comprehen-
social challenges, the insurance industry is undergo-
ing a transformative shift towards sustainable under-
sive risk management. The impact of extreme weather
writing. As climate change, social inequality, and gov-
ernance issues become increasingly prominent, insurers are events transcends national boundaries, and insurers must
navigate the interconnectedness of risks on a global scale.
recognizing the need to integrate Environmental, Social, Climate change, geopolitical factors, and economic interde-
and Governance (ESG) factors into their underwriting pro- pendencies contribute to the complexity of the risk land-
cesses. This shift not only aligns with global efforts to ad- scape. Therefore, insurers need to adopt strategies that
dress pressing issues but also positions the insurance indus- incorporate a nuanced understanding of both local and glo-
try as a key player in promoting sustainability and a frater- bal influences. Collaborative efforts, international partner-
nity who is concerned about their ESG goals. ships, and a shared commitment to addressing global chal-
lenges are crucial elements in developing resilient underwrit-
Rising Global Challenges ing practices that can effectively withstand the complexi-
ties of an interconnected world.
The world is witnessing a surge in extreme weather events,
from hurricanes and floods to wildfires and droughts. These Rise of ESG in Underwriting: A transfor-
events not only pose immediate threats to lives and prop-
erties but also create long-term risks for insurers. As the mative force
frequency and intensity of such events escalate, insurers are The landscape of underwriting is undergoing a profound
grappling with the financial fallout. Simultaneously, social transformation, with Environmental, Social, and Governance
issues such as income inequality, human rights violations, and (ESG) considerations emerging as a pivotal force. Insurance
diversity concerns are gaining attention, adding another companies, in response to the evolving risk environment, are
layer of complexity to the risk landscape. The interplay of not only automating core underwriting processes but are
these challenges demands a holistic approach to underwrit- also integrating ESG criteria into their risk evaluation frame-
ing that goes beyond traditional risk assessments. works. The incorporation of real-time and non-traditional

40 February 2024 The Insurance Times