Page 31 - Insurance Times August 2021

Y Do not do business with a company related to directors/ Y Majority of large insurers do not live up to their role as
management. ‘risk experts’ as they fail to adequately address systemic

Y Be very diligent during mergers and acquisitions. risks such as climate change and biodiversity loss.
Y Accountability and propriety is essential at all levels of Y Insurers’ boards remain ill-equipped to appropriately
manage the environmental and social impacts of their
the organisation.
organisations.
Y Risk Management should go beyond statements,
guidelines and policies. Y Despite the insurance sector’s focus on risk, the world’s
largest insurance companies are largely failing to assess
Y External regulators need to be more proactive.
the impact of climate change on their investment
Y Culture affects behaviour and behaviour will ultimately portfolios.
affect performance.
Y Vast majority of insurers have not yet started to develop
their approach to biodiversity loss.
How Independent?
Y Most of the world’s largest insurers show severe
‘The demise of Independent left 500,000 individuals and negligence of their impact on human and labour rights
organisations from the London Fire Brigade to the Oval across their investment and underwriting activities.
cricket ground to Somerfield supermarkets and the McLaren
Formula One racing team seeking new cover, cost more than A special report by ratings agency AM Best highlights as to
1,000 people their jobs and will almost certainly lead to a how insurers and reinsurers that ignore ESG in their
further 1,000 losing theirs eventually, and punched a hole underwriting and investment decisions confront serious
in the investment portfolios of thousands of shareholders.’ reputational risks. In turn, this risk can cause buyers and
investors to flee to competitors, affecting the companies’
Chris Blackhurst traces the life and times of the CEO Michael creditworthiness and ratings.
Bright in his piece The fall of the house that Bright built.
The meltdown at Independent Insurance took the City and With the likes of the IAIS (International Association of
thousands of policy-holders by surprise, he observes. Yet the Insurance Supervisors) in a sleep easy mode and IFRS
signs of impending disaster had been there for years, with (International Financial Reporting Standards) having missed
only the charisma of its chief executive, Michael Bright, to out on sustainability, responsible lawmakers have taken the
hide the danger. lead. This is an extract from a missive shot by four
Democratic party senators to the top eight US insurers:
Bright, as Blackhurst points out, realised that by not building
up reserves and putting cash aside for an event that may As the leader of a major insurance company, you know the
never happen he could grow profits. How did this translate significant financial and economic risks climate change poses
into the company’s last four annual reports arithmetic? to both underwriting and investment.
Gross premiums rose from £438m to £830m, almost double.
But the outstanding claim reserve barely moved, from
£354m in 1997 to £372m in 2000!

Climate Crisis is staring us in the face
‘Finance & insurance is increasingly hard to procure for high
emissions fossil fuel industries. Nothing surprising about
that! Global insurers will inevitably price in carbon risk, to
protect shareholders & deliver on their treaty obligations –
believes Tim Buckley of IEEFA. The issues involved are beyond
insuring and investing in fossil fuels.

Shareaction recently analysed how the top 70 insurers in the
world are performing? Here are their findings:

The Insurance Times, August 2021 31