A number of major participants in the (re)insurance industry are becoming actively involved with regards to shaping the ESG agenda – given their unique role as risk managers, institutional investors, and risk carriers on behalf of a wide range of industries. They also face critical risks and opportunities associated with climate-change trends and challenges to close the protection gap, according to a new A.M. Best report.
The Best’s Special Report, “Insurance Industry Becomes Active in the Development of the ESG Agenda”, states publicly listed multi-national insurance groups are well aware of shareholders’ expectations and try to align both their long-term investment and underwriting strategies accordingly. Increasing public awareness puts pressure on all types of financial institutions to consider ESG factors and their potential impact on reputational and operational risks. This is reinforced by regulatory developments with an increased focus on ESG issues, such as the inclusion of climate-related non-financial disclosures to facilitate informed decisions.
This report details the way A.M. Best considers material ESG factors as part of the ratings assessment and how they impact Best’s Credit Rating Methodology’s (BCRM) building blocks – balance sheet strength, operating performance, business profile and enterprise risk management.
