Insurers lukewarm on underwriting, ESG integration: Best
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Half of U.S. property/casualty insurers feel integrating environmental, social and governance factors into underwriting is only somewhat or not important, while less than a quarter believe it is extremely or very important, ratings agency A.M. Best Co. Inc. reported Friday.
While a majority of U.S. insurers generally acknowledged the importance of integrating ESG considerations into their investing activities, there was “less of a consensus about the role of ESG in underwriting,” Best said.
Survey findings were based on responses from 238 property/casualty, 69 life/annuities and 18 health insurers in the U.S. rated by Best.
A substantial 38% of property/casualty insurers, versus 5% of life/annuities and zero health insurers, reported that the costs of climate risk are currently priced into policies and factored into technical provisions, Best said.
“The limited response about integrating ESG in the underwriting process may stem from insurers’ general ability to reprice policies annually, at which point they can factor in loss experience,” Best said.
The integration of ESG into underwriting will “take more time” given the lack of a consistent methodology for measuring climate risk and its overall impact on mortality, morbidity, property and environmental risks, Best said.
Between 40% and 50% of U.S. insurers in each segment are actively engaged with ESG and roughly 60% of companies agree that demand from stakeholders to explicitly consider ESG factors has grown, Best said.
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