A new study by Oxbow Partners, a specialist management consultancy for the insurance industry, in partnership with the Bermuda Business Development Agency (BDA), shows that the Bermudian insurance and reinsurance industry is still in the “early stages” of its ESG development.
Based on a survey of over 20 large Bermudian (re)insurers and ILS funds, the report showed that 72% of companies have started engaging with ESG topics but are at the early stages of their ESG journey, whilst 14% have a developed ESG approach.
However, another 14% had not taken any formal action, although the study notes that this is not unusual internationally.
For comparison, most participants saw Bermuda as being ahead of much of the globe, including the US – even if perhaps trailing some parts of Europe.
Investors and shareholders were seen as the biggest drivers of ESG, while lack of resource is the biggest barrier to ESG development: Investors and shareholders were cited as the main driver of ESG (mentioned by 86% of participants), closely followed by employees (81%).
Notably, the study concluded that Bermudian carriers are yet to develop sophisticated approaches to incorporating ESG into underwriting, with less than a third having incorporated ESG into their underwriting at all, and only a very small number having developed more holistic approaches such as net-zero underwriting.
On the investment front, 47% of participants said they had integrated ESG into their process in some way, with many outsourcing investments to asset managers signed up to the Principles of Responsible Insurance.
“We are hopeful this extensively researched report across the key elements of our ESG framework provides the nuance required to better understand (re)insurers’ strategies, the trade-offs they are facing, and the next steps needed,” said Miqdaad Versi, its author and head of ESG for Oxbow Partners.
“ESG is no longer an optional side project for large companies’ sustainability teams. Every (re)insurer on the island needs to consider how they will better embed ESG across all parts of their business.”
Stephen Weinstein, chair of the Bermuda Business Development Agency, also commented: “As the Bermuda market continues its aspirations as a centre of excellence and advocacy for climate resilience, climate finance and ESG-branded business and investment strategies, this report is both a useful accelerant tool and valuable future reference point. As the survey reflects, while both challenges and opportunities lie ahead, Bermuda as a jurisdiction has much to be proud of in terms of ESG values and implementation.”