Page 278 - India Insurance Report 2023- BIMTECH

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Products to address the risks posed by climate have long been recognized as a source of market
differentiation, business growth and improved risk selection for insurers (Zona et al., 2014). The focus
of sustainability in insurance can vary significantly across lines of business. Green and sustainable efforts
in life insurance, for example, have focused on the ethical use of personal genetic data, ethical operations,
and firm sustainability rather than on environmental components (Nobanee et al., 2021). Historically,
insurers have tended to be active in social issues and governance. They have been significantly less active
on environmental issues. Their efforts have focused on internal waste and energy management, and
greenhouse gas emissions. The development of sustainable products, environmental risk analysis, and
sector exclusions are lagging behind (Scholtens, 2011). Because of the systemic nature of climate risk,
there is a need for a coherent sustainability strategy encompassing the entire business model of insurers
(Stricker et al., 2022). However, it is not clear how insurers can leverage customer priorities to build
longer term plans. Customers do not closely associate any sustainability topic with insurance, as is for
example the case for climate change and the aviation or automotive sectors (GIM, 2020). This gives
insurers some flexibility to develop a variety of approaches and business models; on the other hand, it
makes for a more difficult strategic choice and accompanying communication strategy. Little academic
research has been conducted on customer preferences, and anecdotal evidence from practitioners we
have interviewed is contradictory. The authors recently conducted a parallel study in Switzerland. They
found that a significant portion of retail customers are not able to gauge their insurer’s sustainability
activities, that they value social goals just ahead of environmental goals, and that core customers in the
age range 35-54 value sustainability less than younger and older age groups (Pugnetti et al., 2023).

The insurance industry plays a critical role in promoting sustainability and addressing climate change. In
Singapore, insurers are taking steps to reduce their carbon footprint and promote sustainable practices across
their operations. One way that insurers in Singapore are promoting sustainability is through the adoption of
green building standards. Several major insurance companies have received the Green Mark certification,
which recognizes buildings for their environmental performance and sustainability. These companies have
implemented energy-efficient technologies and sustainable building practices, such as rainwater harvesting
and green roofs, to reduce their environmental impact. Insurers in Singapore are also promoting sustainability
through their investment portfolios. Many companies have committed to investing in environmentally
sustainable assets, such as renewable energy projects and green infrastructure. Some insurers have also developed
sustainability-themed investment products that allow customers to invest in companies that are committed to
promoting sustainability. In addition to promoting sustainability through their own operations and investments,
insurers in Singapore are also developing products that help customers to manage their environmental and
social risks. For example, some insurers offer green insurance products that cover risks associated with renewable
energy projects or environmental liabilities. Others offer products that encourage customers to adopt more
sustainable practices, such as car insurance that rewards drivers for using fuel-efficient vehicles. Despite these
positive developments, there is still room for improvement in promoting sustainability in the insurance
industry in Singapore. Some insurers have been criticized for not doing enough to disclose their climate risks
and for continuing to invest in fossil fuels. However, as the urgency of the climate crisis becomes increasingly
clear, it is likely that more insurers in Singapore will take steps to promote sustainability and address climate
change. In conclusion, the insurance industry has an important role to play in promoting sustainability and
addressing climate change in Singapore. By adopting sustainable practices across their operations, investing in
environmentally sustainable assets, and developing products that help customers manage their environmental
risks, insurers can contribute to a more sustainable future for Singapore and the world.