Insurance and ESG: challenges and opportunities


Finally, for all the right reasons, ESG has gained the attention the topic deserves. In this post, I look at Insurance and ESG from a change management perspective. How can an insurer approach and manage the challenges and opportunities that ESG creates?

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Think Tanks, regulators, consulting houses and others publish well-founded, comprehensive guidance from a strategic perspective. Others focus their thoughts more on micro aspects about Insurance and ESG. Definitely, stakeholders appreciate this plethora of high quality information.

ESG is Zeitgeist, but not a hype.

An incredibly wide, well-informed and committed panorama of stakeholders drive ESG forward. ESG will stay.

the diversity and wide range of ESG stakeholders

These stakeholders include the general public, customers, shareholders, governments and their agencies, think tanks, consulting houses, investors and last but absolutely not least NATURE itself. In other words, everybody is a stakeholder in ESG. This is markedly different from past Zeitgeist topics such as “disrupt insurance” or the previously omni-present and pervasive Shareholder Value credo, which also had prominent stakeholders, but much much fewer than ESG.

My thoughts about ESG, formed over months of reading, listening to and talking with others, focus on:

what ESG actually means for business practitioners, especially the C-suite and board of directors

The New Normal Insurer

The New Normal is different “Normal” for all players in the risk transfer industry.  Location, customer base, strategy, regulatory environment and many other factors continue to shape that New Normal.

I use a fictitious Insurer, the “NewNormInsCo” (”NNIC”) to illustrate my points. NNIC will likely be a hybrid of sale/work/service from home, traditional office, cloud and physical interaction with customers and other stakeholders. So how can NNIC go about embracing ESG and creating opportunities at the same time?

ESG and Insurance – HOW TO

What are the ESG risks and opportunities for the exemplary NewNormInsCo? I find the following segregation of activities useful:

  1. Core products and service (product design, underwriting)
  2. Asset Management (managing NNIC’s funds and the float generated by its insurance operations)
  3. Operations: all the activities that NNIC undertakes to deploy its core products and services (accounting, sales, advertising, claims management, talent management – to name just a few)

All three categories are tightly interwoven. Nevertheless, separating them in the ESG context is meaningful. I use a “change management hurdle” benchmark to look at the three categories separately. NNIC needs to successfully deal with this change to fully embrace ESG.

ASSET MANAGEMENT – The Low Hanging Fruit

Provocative statement: asset management is the easiest of the three categories to become ESG compliant.

image of a mobile phone to illustrate a simple communications approach

… pick up the phone and tell your asset manager to shift the entire portfolio into ESG-investment vehicles …

The market has grown to dozens and dozens of billions of USD, is (almost) global and providers are aplenty. Furthermore, the decision is with NNIC’s management. I’m cognizant that assets cannot be wholesale shifted overnight and that asset-liability management, credit rating agencies’ viewpoints, return considerations and other parameters need to be factored in. Still, it is just a phone call away.


Product development and underwriting is one step up on the change management challenge scale. The stakeholder landscape becomes more complex: after all, customers are involved. Clients will only buy what they perceive as real value and/or what they are mandated to purchase.

Having said that, product development and underwriting is at the core of most (yet, not all) insurance companies, hence it should be comparatively easy to lead and manage the internal change.

After all, dealing with “uncertainty on objectives” (aka risk) is the very raison d’être of insurers like NNIC. For more in-depth considerations, refer to the Geneva Association’s publication on innovation and climate change.

Product development in the VUCA world isn’t totally straightforward. Unfortunately, IP protection still isn’t commonplace (maybe it shouldn’t … but that’s another conversation) and in economically uncertain times, NNIC’s management might have to focus on short-term cost management instead of mid-term planning.

Despite all this, if not the insurance industry … who else then? Winding the clock back a good 120 years, the appearance of cars on Europe’s road was a text book case of an “emerging risk”. The industry found ways – with some struggles along the way – to deal with the risks and provide appropriate products.


NNIC’s operations – encompassing talent management, claims handling, data/IT infrastructure, office/WFH logistics, claims management and many, many more – are clearly the most challenging “change mountain” to climb.

Firstly, the diversity of stakeholders is much larger than in the other two categories. Secondly, many aspects of operations are, rightly or wrongly, NOT core to NNIC. Expertise might not be sufficient; some activities have been outsourced and other processes and procedures might have become obsolete or will become outdated in due course. Lastly, since so many different aspects are involved, one of the many questions to answer is: “where to start”?

Having said all that, just because something is a challenge is NOT a reason to shy away from it.


One practical way is to execute a two-pronged approach: firstly, implement a few long-hanging fruits and concomitantly work out an appropriate medium-term strategy.

reaping some low-hanging fruit


developing and executing a sound mid-term strategy!

The choice of low hanging fruits is quite wide, your preferred search-engine will provide plenty of meaningful suggestions. Some transactional activity is welcome, stakeholders will notice and welcome that NNIC’s management is active.

Just watch-out for the “green washing” trap, simply putting a “green” sticker onto an insurance policy is not ESG.

There is, however, no way around developing and executing a sound and comprehensive ESG-strategy. I always recommend keeping the main stakeholders in mind. Ultimately, they will be working for NNIC and they will be buying from NNIC.

Megrow’s lead consultant and his partners have considerable experience in developing sound strategies for the risk transfer industries. Contact us via the ‘buttons’ below.

Thank you for reading this post. I sincerely hope you enjoy what you are doing and stay safe. Stay tuned for more posts, next time probably about ERM again.