How will insurance companies green their offers?

ESG standards are shaking up the insurance world. These environmental, social and governance standards that are currently being developed will force the entire sector to act Sharp shift towards better durability. The process will be long. It is divided into six axes.

  1. European classification: a new measure of sustainability

In the wake of the Green Deal, Europe has embarked on a comprehensive study of the environmental impact of all economic activities, which has been called the sweet name of the classification. The goal is to achieve a Classification of economic activities according to their sustainability. Greener activities will be preferred in all sectors, including the insurance sector.



“Environmental transparency reporting will soon be just as important as financial reporting.”

Paul Wendells

Risk Management and Finance at Assuralia

2. Improve environmental transparency

Insurers will be required to issue transparency reports detailing the actions they are taking to make progress in sustainability. “It’s a lot of work. These transparency reports will soon be just as important as financial reporting,” said Paul Wendells, Assuralia’s director of risk and finance. The purpose of this increased transparency is to Enabling consumers to learn about the sustainability of the insurance company and its activities.

3. Green products from all insurance companies

All companies will soon be required to feature sustainable products in their offerings. This procedure primarily concerns offers related to investment products, such as life insurance. “The client can tell their insurance company what percentage of the sustainable investments they want to see included in their contract,” explains Paul Windels (Assuralia). So each client will define their own sustainability profile. “From next August, customers will be able to choose between three main categories of sustainable products. I expect companies to create new sustainability indicators that are easy for customers to understand,” continues Paul Wendells.

4. Sustainable Councils

Boards of directors will have to evolve towards greater accountability for sustainable development. “Each CA will have to develop a due diligence policy regarding sustainability standards,” explains Paul Windels (Assuralia).



To obtain ESG scores, insurers can require companies that are part of their portfolio to change their practices.

Paul Wendells

Risk Management and Finance at Assuralia

5. Indirect impact on unsustainable business

All of these new rules and standards are specifically aimed at encouraging insurance companies to Putting pressure on companies that are part of their investment portfolios. “It is very likely that, in the investment portfolios of insurance companies, each company will have an ESG score. To obtain it, insurers can ask companies that are part of their portfolios. change their practices.

6. Impact on individuals

Can insurance companies do one day Putting pressure on their individual customers, if they feel they are not making enough effort to achieve more sustainability? One can imagine that the insurance company requires a home insurance contract to better insulate the house. “Currently, there is no such binding standard on the table. This could develop, but at a political level it is difficult to take this step. It is in the interest of people who are financially able to isolate their homes, which could lead to politics,” says Paul. Wendells.

Conclusion

  • Insurers will have to integrate social, environmental and governance (ESG) standards into their product portfolio.
  • They will have to prepare environmental transparency reports.
  • To get a good ESG score, they can lobby for companies that are part of their portfolio.

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