Page 275 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 263

Sustainability and Insurance: Customer

Priorities in Singapore

- Carlo Pugnetti
30 ZHAW Institute of Risk & Insurance; Zurich University of Applied Science

- Pakkam S. Janardhanan
Singapore College of Insurance

Abstract

Climate change is a significant threat to society and has been recognized as particularly important in
Singapore. Insurance companies need to play a significant role in meeting this challenge. However, it is
not clear what their customers expect nor the priorities that these issues should take with respect to
other sustainability targets. This research conducts a survey of retail customers to understand these
priorities. We find that customers consider sustainability as a very important factor in their insurance
purchase decision and that they place a higher priority on social issues. They also value highly the
current engagement of their insurers. They consider Data security as the most relevant area of engagement
and e-Mobility as least relevant. Insurers should further develop and communicate efforts in sustainable
investment management and claims handling. Further, customers seem to have started to self-select into
insurance customer portfolios based on the insurers’ efforts in sustainability.

1. Introduction

Sustainability is an important and increasingly significant component of business strategy. It is
usually defined as comprising Environmental, Social and Governance (ESG) aspects, and this definition
has evolved organically over time from Corporate Social Responsibility (CSR) efforts (Purvis et al.,
2019). One of the more recent frameworks was provided by the United Nations with 17 Sustainable
Development Goals (SDGs) (United Nations, 2015). The vast majority of global companies issue
sustainability reports tracking their progress towards meeting sustainability targets (KPMG, 2022). At
the same time, two-thirds of them recognize climate change as a risk to their business, while social
elements are acknowledged as a risk by half of the global companies. Indeed, while significant and steady
progress has been made towards achieving the United Nations sustainable development goals (United
Nations, 2022), it is also clear we will fail to meet the overall 2° C global warming target and are on a
trajectory to miss the 3° C target as well (IPCC, 2021). Anthropogenic climate change is a reality we
need to face, and there is no alternative to sustainable development. Rather than eroding competitiveness,
sustainability can both lower costs and drive business innovation (Nidomolu et al., 2009).