Sustainability leadership in insurance: Harnessing insurance for the SDGs
Why close alignment across the industry is needed to achieve the SDGs
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In this third session in the UNEP's Principles for Sustainable Insurance Initiative series, stakeholders from across the insurance industry - and all continents - discussed the industry's contribution to the UN Sustainable Development Goals (SDGs). Many insurance products & services already support these but there is a clear need for increased and sustained industry action to deliver on the SDGs. This is especially important now in 2020, the start of the UN’s Decade of Action to achieve the SDGs by 2030.
As an industry, our key purpose is to advance societal resilience. We do this by strengthening societies' ability to bounce back after major setbacks and reignite growth.
At the same time, re/insurers and supervisors have long played a supporting role in promoting sustainable development and participants shared initiatives that clearly support and strengthen this development. For the industry as a whole to really make a difference, however, there needs to be agreement and close alignment on a clearly defined roadmap to help achieve the SDGs.
Raising the sustainability agenda within the re/insurance industry
Swiss Re's CEO, Christian Mumenthaler, set the tone for the event by calling for a coalition of the willing across the industry. Together, stakeholders should seize opportunities to achieve the goals by strengthening links between insurance portfolios and the SDGs.
Ever ambitious, Christian set out four steps for concerted industry action: systematically map links between insurance products & services and the SDGs; define frameworks for impact measurement; create industry-wide momentum and set ambitions; and execute on these joint targets.
With this unique opportunity to shape an industry roadmap – one that will help stakeholders to individually and collectively achieve these goals - we heard from the session speakers about the importance of principles-based approaches, impact measurement, accessibility and consumer transparency, and sustainable development for the future.
Making a collective contribution
Alison Martin, CEO, EMEA and Bank Distribution, Zurich Insurance Group, called for consistent measurement frameworks. Principles-based approaches, together with critical support from insurance supervisors, will help the industry to deliver this consistency. On impact measurement, Mike Mitchell, Head Property and Specialty Underwriting Reinsurance at Swiss Re, is looking to move from a qualitative to a quantitative evaluation of Swiss Re's underwriting portfolios – to uncover where SDG alignment is challenging and to develop a baseline from which to start measuring progress over time.
For Conor Donaldson from the International Association of Insurance Supervisors, one way we can make real progress against the SDGs is to increase access to insurance for traditionally underserved segments of society.
Ricardo Lara provided perspectives from the public sector. As California's Insurance Commissioner, Ricardo sees the intrinsic value of the SDGs in building a sustainable insurance roadmap. With the launch of a first of its kind consumer-targeted database from the California Department of Insurance, he highlighted growing demand from consumers and businesses for innovative insurance products and services that clearly address climate risks, contribute to reducing emissions and increase resiliency.
The importance of partnerships
We heard views from across the globe – from China to Brazil to Japan and from Germany to Namibia to France – on efforts to map SDGs to insurance portfolios. There's a real sense of readiness across the industry to work collaboratively to measure impact, create standards and increase transparency.
Our work on the SDGs so far shows that the industry‘s focus is no longer on downside protection only, but also increasingly on the impact to society. These efforts are supported by government initiatives and commitments, and public private partnerships, for example to increase smallholder farmer resilience to climate change.
Digitisation – offering real opportunities for inclusion
Partnerships are also key to reaching emerging markets populations, namely distribution networks that offer significant reach. For Garance Wattez-Richard, Chief Executive of Axa Emerging Customers at Axa Group, these digital networks – mobile network operators, remittance companies, E-wallets – are vital to accelerating the reach of insurance, and helping to meet the SDGs. Participants also highlighted how digital transformation helps to provide more affordable products, thereby reducing inequality.
Links to SDGs show up in many ways but they need to move up the agenda. Renate Bleich, Head of Sustainability at Munich Re, acknowledges that while the SDGs are incorporated in industry business strategies and development activities, we still have more work to do.
According to Veronica Scotti, Chairperson, Public Sector Solutions at Swiss Re, mapping links between insurance products and the SDGs is so much more than an intellectual exercise. It helps the industry focus on the value we can deliver to clients and to society.
Many insurers are embracing a responsible investment approach and we now have evidence that this results in more favourable risk/return portfolios. As a next step in this evolution, the industry is increasingly focusing on the underwriting side and aims to better align products and services with impact, without compromising prudent, risk-based underwriting and profitability ambitions.
And there is a regulatory dimension as unsustainable development can lead to shocks to the system and thus threaten financial stability – a core mandate for regulators, alongside consumer protection.
As an important industry, our contribution is significant and we can do more. In 2018, the private insurance sector paid out total claims of USD 4.6 trillion – over 5% of global GDP. This demonstrates the strong economic lever the industry has on the underwriting side to contribute to resilience and sustainability at the same time. By systematically applying the iSDGs to business strategies, the insurance industry can support efforts to progress even further.
Setting ambitions for and measuring our impact will require a multi-stakeholder approach – and a lot of energy from all sides. I look forward to the continued individual and collective efforts to achieve the SDGs by 2030.
Join us for the next event
Many thanks to Butch Bacani and Gillian Rutherford for moderating and to all the speakers for their valuable contributions.
Join us for the next event where we'll discuss the latest developments on aligning re/insurance portfolios with the 2050 net zero targets.