Commercial Property & Casualty (re)insurers are implementing ESG scores into portfolio management and underwriting workflows. Understand more about the journey.
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Authors:
Paul McCarney - Director-Advisory Services
Shaheen Razzaq - RMS, a Moody's Analytics Company
Salman Siddiqui - Director-Industry Practice Lead
As insurers move towards automation and further digitization of their underwriting processes, accurate data and sophisticated analytics are becoming increasingly important. One area in which this is particularly important is Environment, Social, and Governance (ESG). ESG factors and scores offer insurers new insights into risk and decision-making, but they also bring new data integration challenges. Insurers that meet these challenges can benefit from considerable competitive advantage.
To understand more about the Commercial Property and Casualty (P&C) Insurance industry's journey to implement ESG scores, Moody's Analytics and RMS, a Moody's Analytics Company has undertaken a comprehensive, independently run market survey. The results of this survey, alongside insights from our experts, help validate the current state of the market and identify any pain points.
Taking the temperature of the market's progress on ESG implementation
Our survey received 36 responses from Commercial P&C (re)insurers, all from individuals engaged with portfolio management and underwriting functions. The respondents were from a broad range of institutions with Gross Written Premiums (GWP) ranging from $100m to more than £5bn.
Why integrate ESG into your business?
The survey results present some interesting data on the key drivers for Commercial P&C insurers to integrate ESG into their business. 65% of respondents identified risk management as a key driver with 81% identifying managing reputational risk in particular.
Taking a phased approach to provide solid foundations for an ESG-centric business model
Our conversations suggest insurers have appetite for rapid progress in integrating ESG into the business. However it is imperative that insurers take an iterative, phased approach.
The importance of understanding correlations
Survey respondents were asked which correlations they wanted to understand further. We saw that three quarters of respondents want to understand correlations between ESG risk and claims.
The opportunity to personalize the view of ESG risk
52% of respondents are considering whether to personalize the view of ESG risk.
Following consistent market standards
The Commercial P&C market often exhibits an approach where there is safety in numbers. The direction of travel is likely to be similar for many participants.
Moody's have been engaging with the market and working with with our commercial P&C customers to develop a solution that considers ESG in the risk selection process. To find out more about how Moody's ESG Insurance Underwriting solution can help your business, contact us today.
