Where do US insurers stand in integrating environmental, social and governance issues?



US insurers are increasingly listening to stakeholder requests that they use social, environmental and governance factors in their decision-making.

According to a survey by AM Best, 6 out of 10 companies are aware of the increased demand from stakeholders to take ESG factors into account when making decisions. While the United States still lags behind Europe in terms of ESG integration, AM Best said the results are still remarkable and that US carriers should think about how to put the ESG factors of the market into practice. most efficient way.

“The survey results show that insurers believe there are risks in ignoring stakeholder pressures related to ESG factors, and in particular when it comes to diversity and inclusion, carriers generally consider the corporate governance as the key to managing and mitigating reputational risk, ”Rosemarie Mirabella, Director, AM Best, mentioned.

AM Best has assessed P&C, life / annuity and health insurers and reinsurers operating in the United States on their approaches to ESG principles, and found that insurer priorities vary by segment.

While responses from P&C insurers show that they focus more on environmental risks in their ESG engagement, life / annuity insurers report focusing primarily on investment risk, given the importance of returns, liquidity and the adequacy of assets and liabilities with their activities. Health insurers have paid greater ESG attention to the social impacts of health equity, which came under more scrutiny during the pandemic, in an effort to eliminate disparities in health outcomes.

At the same time, according to Best’s special report, “US Insurers’ Perceptions of ESG,” the three US insurance segments are focusing on corporate governance.

Other conclusions of the report:

  • Between 40 and 50 percent of US insurers and reinsurers surveyed, and 51 percent of stock companies versus 42 percent of mutuals, are actively engaged in ESG.
  • Over 50% of those surveyed in the P&C and life / annuity industries agree that a good understanding and integration of ESG factors is increasingly essential to the long-term viability of their business , against 39% for the health insurance sector.
  • About 60% of US insurers and reinsurers want greater clarity from regulators, especially in identifying, measuring and communicating ESG factors.
  • The integration of ESG factors into the investment process seems to be ahead of underwriting. Less than a quarter of AM Best survey respondents in each segment think it is extremely or very important for underwriters to consider ESG factors in the underwriting process.

Source: AM Best

The subjects
Carriers United States Pollution

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