Global Insurance Law Connect – Risk Radar Report 2023

Date: Wednesday, May 10th, 2023 by Michaela Hickson.

Global insurance market facing major challenges from ESG but also sees significant opportunities for growth.

  • Insurers facing twin pressures from regulators and demanding customer base
  • Insurance options shrinking for carbon intensive companies
  • Climate related natural catastrophes make parts of the world uninsurable
  • New solutions offer way forward but more needs to done

Global Insurance Law Connect has launched the fifth edition of its annual ‘Risk Radar Report’. For the first time, we zero in on a single topic – Environment, Social and Governance – and highlight its worldwide impact on the insurance industry. A collection of insights from leading specialist insurance law firms across 21 countries, the Report details the growing awareness globally of ESG risks and how the insurance industry is well positioned to respond.

Gillian Davidson, Chair of Global Insurance Law Connect, commented:

“It is unsurprising that the consensus from our member firms is that ESG has become an increasingly important issue for insurers and the wider business community.

We are already seeing the significant impact of ESG on the insurance industry, for example with the dual governmental and social pressures of new regulation and stakeholder activism. The increased scrutiny of ESG strategies in many jurisdictions is also impacting directors’ and officers’ and financial institutions’ coverage, as well as professional indemnity policies for firms advising on climate related financial disclosures.

There is recognition within the insurance industry that embracing appropriate ESG policies can lead to significant growth opportunities, the creation of long-term value, and risk management benefits. While insurers have made advances in this area, more needs to be done to meet governance and climate change risk assessment obligations.

Members are also seeing the impact of ESG on the business community. Organisations that rely on carbon-intensive production are struggling to find insurance options, and it is increasingly difficult in many parts of the world to underwrite business for frequent and severe natural catastrophe events. In addition—against a backdrop of geopolitical risks, supply chain disruptions and inflationary pressures-organisations are coming under increasing strain as they aim to strike the right balance between ESG investments and managing increasing costs.

One of our member firms emphasised the importance of taking the right stance in the current debate, citing that it is no longer just about mitigation but adapting our way of living. Insurers can contribute to this transformation by being early adopters of ESG best practices and supporting ESG principles in their policies.”

To download the report, please click GILC Risk Radar 2023.

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