ORLANDO, Florida – Captive owners that care about environmental, social and governance issues will be able to create beneficial and long-term relationships with insurers and reinsurance partners, experts say.

They were speaking Thursday during a panel session at the World Captive Forum, sponsored by Business Insurance.

Captive owners should care about ESG because capacity providers, reinsurance partners and the industry itself is starting to care, said Nate Reznicek, president and principal consultant at Captives.Insure LLC based in Knoxville, Tennessee. 

That’s going to trickle down into the captive insurers that are reinsuring these carriers, he said.

If captive owners end up in a position that is contrary to the ESG goals of their prospective partners, “that’s not going to result in the longest, most beneficial relationship for all parties,” Mr. Reznicek said.

“You can certainly eliminate people or maybe even reduce some of the options that you may have as a captive owner if you’re in a risk that is perceived as a moral hazard,” such as firearms manufacturing, cannabis or oil and natural gas where fracking is involved, he said.

The renewable energy transition is an important topic that is coming up in the underwriting process, said Marco Hensel, Chicago-based senior vice president, underwriting lead, HDI Global Insurance Co., part of HDI Global SE.

“When we look at potential clients and look at their plan, how they address this challenge, we look to statements, we ask them questions in the process of a discussion. And, of course, we want to partner with people who are like-minded,” Mr. Hensel said.

Underwriters will ask clients about their net zero transition plans, depending on their industry, “but if you’re talking about oil and gas more and more underwriting restrictions are coming on globally,” he said.

Jordan Mosher, Columbus, Ohio-based vice president at Huntington National Bank and director of Huntington Captive Insurance Co. noted that the insurance industry used to be paper heavy and intensive.

Out of necessity, that has streamlined into DocuSign and Adobe Pro, which has helped reduce paper production and water consumption, Mr. Mosher said.

“You can look backwards and say we did this as part of an ESG initiative, whether or not that’s true, you know, who knows, but I think the results of that have been very, very positive,” Mr. Mosher said.

ESG initiatives at Huntington Bank are purpose-driven and leverage its economic scale, he said.

“Environmental is honestly where we spend most of our time. You can argue COVID forced real estate reduction, validations etcetera, but the results are still good,” Mr. Mosher said.

“Hybrid work schedules help with that side also, but we go deeper in water consumption, actual pages per office that are printed. We have live metrics, we have goals, we have targets that each individual business unit is accountable for,” he said.

Jonathan Meer, New York-based partner at Wilson Elser Moskowitz Edelman & Dicker LLP, who moderated the session, noted that social issues, such as issues of gender and race, and diversity, equity and inclusion have become more controversial for businesses.