Insurance companies, as the second-largest group of asset owners behind pension funds, are expected to play a critical part in the transition to a greener economy. Not only can they drive change through responsible operations and asset allocation, but they can also incentivize other businesses and individuals by considering environmental, social, and governmental (ESG) factors in underwriting. Regulatory drivers in different jurisdictions mean that insurance clients are at various stages of their ESG maturity.
Questions clients should consider are:
- What is my current ESG ambition and maturity?
- What are the key market, customer and competitive trends which need to be considered within the context of ESG?
- What are the potential ESG opportunities and risks?
- Which opportunities are most value enhancing?
- What are the key platforms for the ESG strategy?
- What is required to execute upon the identified ESG platforms?
- What is the sequence of activity and investment required?
ESG can have a significant impact across the whole business and insurance functions. As such, KPMG professionals can offer a wide suite of services from strategy to implementation across the value chain:
Strategy – Helping firms define what ESG means for their business and brand, creating a clear roadmap for the business which can then be adopted and implemented by the business
Product and proposition – Helping to ensure products adhere to new regulatory labelling requirements, as well as assisting in the development of new types of ESG products with the decarbonization team
Underwriting / investment management – Formulating underwriting strategies, collating data and metrics to screen potential clients against your own ESG and net zero criteria
Distribution – Assessing if brands used for distribution of products share the same ESG values and providing a roadmap and training for your distribution network
Claims management – Working with suppliers to help limit the operational carbon footprint of claims services, including a decarbonization strategy
Finance and actuarial – Incorporating ESG disclosures into a controlled non-financial reporting process, as well as building ESG into business planning processes and monitoring against key ESG metrics
Risk management – Establishing appropriate ESG governance frameworks, risk appetite statements and climate scenarios, and incorporating these into appropriate disclosure and regulatory reports
Climate modeling – Provision of Climate-IQ, a leading climate risk model, that as well as quantifying exposures to climate risk from transition and physical risks can be a valuable strategic tool for planning purposes as well as navigating the path to net-zero
Data and technology – Provision of data modelling and analytics tools such as ESG-IQ, as well as working with technology providers to help bring cost effective solutions to market
People and culture – Assistance on inclusion, diversity and equity and sustainable workforce initiatives, as well as human rights monitoring