Our survey of insurers and reinsurers globally, including Bermuda, shows that the vast majority are stepping up their commitments on climate change, tackling inequality and other environmental, social and governance (ESG) issues. But most are still struggling to turn their ambitions into concrete action on ESG. How do Bermuda insurers and reinsurers compare to their global peers? How can you as an insurer or reinsurer plan and evaluate your ESG strategy?
Six Key takeaways
- ESG ambitions
- Big hurdles to overcome
- Struggling to make headway
- Meeting stakeholder expectations
- Impact across the board
- Governance is most advanced
ESG ambitions
Bermuda insurers and reinsurers’ top ESG priority is minimising the impact of climate change. Enhanced reputation, reduced risk and creating a fairer society also feature prominently. Most identify their approach to ESG as strategic, with the rest largely describing themselves as pragmatic.
Big hurdles to overcome
Bermuda insurers and reinsurers see the biggest challenges they face in pushing forward on ESG as working out how best to take action, followed by understanding regulation, and changing their operating model to respond to ESG.
Struggling to make headway
(86%) of Bermuda insurers are incorporating ESG into their strategy in ways that go beyond regulatory requirements. But most have yet to take significant action (32% of Bermuda insurers have taken no action on ESG and 54% have met minimum requirements, which puts them some way behind the global survey population as a whole)
Meeting stakeholder expectations
Bermuda insurers and reinsurers see customers and regulators as the most important stakeholders when considering their ESG strategy, in line with global peers. Bermuda respondents are more likely to see employee expectations as a priority than others worldwide.
Impact across the board
Most Bermuda insurers and reinsurers believe that ESG will have an impact across all functions. Investments are most likely to be affected, though most also cite underwriting and claims.
Governance is most advanced
A significantly higher proportion of Bermuda insurers and reinsurers rate themselves as mature/leading in the area of governance than the global survey population.
"There’s a clear business imperative for re/insurers to be part of the solution to address climate change. Many investors now also look at ESG metrics as closely as financial metrics when making capital allocation decisions. In turn, a focused, strategic approach to ESG will enable Bermuda re/insurers to continue to access capital, comply with ever expanding regulatory requirements, increase shareholder value – and attract and retain talent.”
The way forward
How can your business overcome the hurdles and move forward on ESG? Drawing on the survey findings and our work with clients, three priorities for action stand out
Clarify your strategy
- Engage with stakeholders to understand what they expect, the implications for your strategy and how to respond.
- Identifying the actions that will make the most difference and gauging their operational and financial impacts will help you to develop a pragmatic and realisable roadmap for change.
- It’s also important to establish a robust governance structure to strengthen accountability, improve the quality and reliability of reporting and make sure you’re living up to your promises on ESG.
Bridge capability gaps
- Compare current capabilities against what you need to realise your strategic objectives.
- Determine your approach to bridging the gaps (build, buy or partner) and carry out a cost-benefit analysis to prioritise initiatives in order of ‘must have’, ‘should have’ and ‘nice to have’.
Track progress and target intervention
- Track progress against a short list of tangible KPIs.
- Gather perspectives from staff in different areas and levels of your business. You can support these internal assessments by running focus group sessions with different stakeholders. The results will help you to build on strengths and target areas in need of intervention or a fresh approach.
For a copy of the full report, Insurance ESG Strategy Survey, please reach out to us at marina.mello@pwc.com or the contacts below
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