Sponsored content: Ashley Easen, director of risk and ESG at Gallagher Bassett, shares insights into the steps firms can take to meet regulatory requirements, build customer trust and protect against reputational damage
The past few years has seen a significant increase in regulatory interest in environmental, social and governance (ESG) issues as pressure builds on businesses to address growing concerns about their impact on the planet and wider society.
The challenge for insurance firms is that pressure is only set to increase, with governments committed to enforcing even more stringent ESG measures over the next two years.
Know your requirements
In today’s environment, insurers are increasingly expected to be aware of their ESG obligations.
The UK Government has a range of mandatory, voluntary and comply-or-explain regulations, with the latter requiring an organisation to clearly explain why it does not meet requirements and provide an alternate plan to address concerns.
Between new regulations and updates to existing legislation, an increasing number of firms are appointing teams or individuals to assume responsibility for staying abreast of changes.
Proactive policies
It is no longer enough for insurers to merely be reactive in the ESG space.
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From underwriting and risk management to investment decisions – integrating ESG policies and strategies into key business areas should be a priority.
This extends to weighing up exposure to the impact of climate change and the inevitable legislative and regulatory measures aimed at tackling the global risk.
Invest in people
From Better Insurance Network releasing an e-learning solution to support sustainability upskilling, to the Lloyd’s Market Association launching a dedicated ESG Academy, UK insurance firms are increasingly able to invest in training programs that raise staff awareness about ESG issues and their implications.
It is one thing to have a great strategy. It is another to have qualified and committed people to put it into practice.
Commit to transparency
Quality reporting and disclosure lies at the heart of ESG.
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Establishing strict processes and procedures for keeping stakeholders abreast of results and developments not only enhances transparency, but builds trust, fosters a positive reputation and provides peace of mind should the regulatory spotlight fall on a firm.
Data and metrics
Few sectors have been untouched by the rise in data analytics and ESG-conscious insurers are benefiting by adopting technologies that crunch the numbers to assess and manage risks.
Selecting the right frameworks is essential for balancing strategic objectives with reporting requirements.
Embrace collaboration
Given the growing scope of ESG compliance and legal risks when it is done poorly, there is a lot to be said for collaborating with industry experts.
Many insurers are seeking advice from or partnering with industry peers and government bodies that are well versed in not only how to meet regulations but stay ahead of the curve.
