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AM Best: 60% of US carriers recognize need to adapt to ESG

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Six in 10 US insurance carriers have said stakeholder demand to consider environmental, social and governance (ESG) factors explicitly in their decision-making is increasing, according to a survey by AM Best.

According to the report “US Insurers’ Perceptions of ESG”, P&C carriers are more focused on environmental risks in their ESG engagement, but all three US insurance segments are focused on corporate governance.

AM Best surveyed 238 P&C companies, 69 life annuity companies and 18 health companies.

Commenting on the results, AM Best director Rosemarie Mirabella said: “Survey results show 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.”

The report found that more than half of the respondents in the P&C industry agree that the understanding and integration of ESG is “increasingly critical to the long-term viability of their business” compared with 39% from the health insurance industry.

Survey results also found that 69% of P&C carriers believe disregarding ESG factors would lead to “elevated reputational risk”.

Further, around 60% of the US reinsurance industry is seeking greater clarity from regulators, AM Best said, particularly with respect to “identifying, measuring and reporting ESG factors”.

Jason Hopper, associate director of industry research and analytics at AM Best, said: “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.”

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