ESG a growing factor for decision making in insurance, AM Best study finds

A recent survey by AM Best has found that six in ten US insurance companies agree demand from stakeholders to consider ESG factors in their decision making is growing.

According to Reinsurance News, the US insurance market is still considered to be in the nascent stages of ESG integration compared to that of Europe.

The data from the survey found that property and casualty insurers showed more focus on environmental risks in their engagement with ESG, while life and annuity insurers were found to be concentrating more on investment risk.

The survey also discovered that health insurers have all put greater ESG attention on the social impacts of health equity. Reinsurance News said that area has been subject to extra scrutiny during the pandemic in order to eliminate disparities in health outcomes.

AM Best director Rosemarie Mirabella said, “Survey results show that insurers believe there are risks to ignoring stakeholder pressures related to ESG factors, and particularly with regard to diversity and inclusion, carriers generally view corporate governance as key to managing and mitigating reputational risk.”

AM Best associate director for industry research and analytics Jason Hopper added, “Companies are evaluating how to integrate ESG factors into their business models, but to be viable they must also identify and assess how these factors can impact their business from a risk perspective, while also identifying new opportunities.”

The Bank of International Settlements recently warned of the escalating risk of a price bubble in environmentally-friendly-focused asset markets.

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