The consequences of climate change are increasingly threatening European consumers. Extreme weather events and environmental regulations can complicate the ongoing operations of companies, who don’t always adequately protect themselves from risk. Insurance industry representatives participating in the conference “Insurance: Sales, Innovation, Risk 2023,” believe that the sector can play a significant role in the development of the European economy by educating consumers and entrepreneurs about ESG (Environmental, Social, and Governance). The event was partnered by consulting firm Deloitte.
One of the topics discussed at the conference, organized by the Centre for Strategic Thinking, were the challenges facing the Polish and European insurance market related to the growing importance of sustainable development issues. At the end of September, representatives of insurance companies and financial institutions gathered at the Stock Exchange Centre to discuss the relevance of environmental, social and corporate governance issues in the transformation of the insurance sector.
ESG as an opportunity for the industry
The discussion started with data from the European Insurance and Occupational Pensions Authority (EIOPA) on the insurance gap, the difference between the economic loss resulting from insured events and the amount of compensation paid as a result, which can cover such loss. It turns out that currently, the average percentage of insured losses related to climate disasters in Europe is only 25%. The experts agreed that such a difference exemplifies the important tasks insurers have to carry out, including in preventive actions and consumer awareness of the importance of insurance.
“The insurance sector today has a key role to play in supporting consumers and businesses in protecting against climate change events. Equally important is increasing market participants’ knowledge about policies protecting against the financial consequences of natural disasters. Real support for consumers by creating products and services tailored to today’s realities can also provide a unique opportunity for further sector development,” says Irena Pichola, partner, leader of the sustainability advisory team in Central Europe, Deloitte.
The debate also highlighted the role of insurance companies as investors. As one of the most important providers of development capital, this sector can contribute to achieving sustainable development goals in areas such as energy. It was emphasized that it’s not just about providing financing, but also clear communication of investment selection criteria that can be considered sustainable.
According to the participants, sharing knowledge in this area can also help reduce “greenwashing.” Irena Pichola points out that setting the correct path towards sustainable development is both a challenge and an opportunity for the sector. Thanks to their knowledge, insurers can offer new products and services allowing consumers to protect themselves against current and future risks.
ESG in practice
The panelists believe that one of the threats to the effective green transformation of the Polish and European economy could be perceiving ESG solely as a tool for image building. It’s therefore essential to incorporate environmental, social and corporate governance factors into business strategies with tangible measures, considering the scale of changes and the time perspective needed to achieve strategic goals.
The debate also emphasized the role of ESG in gaining a competitive edge. Discussion participants pointed out that the increasing importance of such solutions as sanction lists or laws aimed at mitigating money laundering could exclude some entities from economic life. Meanwhile, effective implementation of ESG criteria in a business strategy would help avoid such threats and facilitate the company’s further development.
“The implementation of ESG factors into business strategies is a key step in preventing potential threats and will constitute an integral part of the process of gaining a competitive edge in the future. The insurance sector plays a crucial role as support for companies in this area thanks to their knowledge in the field of ESG. Cooperation with insurers allows companies to effectively manage risk, attract socially responsible investors and increase customer trust, which translates into long-term success and competitiveness in the market,”says Paweł Roszkowski, Director of Compliance and Standards, UNIQA.
