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ESG factors to play a larger role in the future of underwriting

5th October 2022 - Author: Kane Wells

Leading insurance broker Marsh has released data from a survey of 30 insurers representing a significant cross-section of the UK insurance market, exploring how ESG factors are being used to assess clients’ risk profiles and the extent to which this trend might accelerate.

marsh-logoThe survey found that all respondents confirmed that ESG factors will play a larger role in future underwriting, therefore, Marsh notes that it is key for risk managers to ensure they have a good understanding of their own ESG journey.

The data report adds, “While all of the insurers surveyed were working on their specific underwriting requirements for ESG, with regard to climate disclosures, all respondents pointed to a minimum requirement for disclosure of scope 1 and 2 missions data and transition plans.”

“Companies should consider how best to present their profile to insurers and how they differentiate from their peers and the wider marketplace.”

According to the survey, ESG is also set to have a significant impact on insurers’ risk selection as carriers become more aligned to support higher-scoring ESG organisations.

Stratumn, by SIA Partners

Marsh writes that these insights give a strong indication of insurers’ direction of travel.

It adds, “There will, of course, be variability in approach, appetite, and application across different product lines and regions — and even within the same global carriers — as insurers establish an ESG strategy across their various line underwriters.”

“It is also important to stress that not all underwriters are currently considering ESG factors and, within certain industry and segments of the portfolio, ESG is yet to make its way to the forefront.”

Additionally, the report observes that despite there being no market-wide approach at present, all respondents indicated that they envisioned some form of a unified approach in the future.

Marsh affirmed it has also conducted similar conversations with carriers outside the UK, finding that the current lack of a unified approach is a common point globally.

It concluded with the prospect that companies should consider how to assess and communicate their ESG profile and journey, adding that Marsh is well placed to support those discussions.

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