With assets under management of approx. € 10 billion, insurers in Europe have enough financial influence to drive change that will promote sustainability earn them more trust among customers.
Europe’s major insurers enters 2021 with a major opportunity to strengthen their commitment to sustainability.
By careful use of their extended financial assets and real estate portfolios can significantly increase their support for environmental, social and governance initiatives. This wsick insurance providers greater trust and support among consumers increasingsuffer look at big businesses to demonstrate their commitment to building a sustainable future. Claims to corporations to be forces for the “social good” is escalateing in the aftermath of the COVID-19 pandemic.
We worldwide consumer research shows that 66 percent of retail buyers believes the COVID-19 pandemic has increased the need for businesses to help improve social and environmental conditions. A similar proportion of consumers want businesses to ‘build better’ long-term, sustainable, and fair investments.
With assets under management amount to approx. €10 trillioninsurers in Europe have a lot of money muscle to apply changes that will promote sustainability. AllianZ, Aviva, AXA, and Zurich Insurance, for institution, already use their invfortress capital award as a lever to promote sustainability. They ‘re in shorting investments in organizations such as coal miners who can significantly damage the environment. Some of these carriers are also increase their funding of environmentally friendly green energy enterprises. Such funding will increase over the next few years.
“Few strategic decisions are more important than where to allocate capital.”
Sustainable insurers, as I mentioned earlier in this blog series, sustainability is at the heart of their business strategies. It guides all important decisions. And few strategic decisions are more important than true to allocate capital. Progressive businesses, eager to become sustainable insurers, are increasingly considering sustainability when making investment decisions.
Sustainable insurers shall not just move investments from companies that harm the environment invest capital greener alternatives. They will also send funding from companies with poor social responsibility or management recordsward businesses that are better corporate citizens. Oyou research with the United Nations Global Compact found that companies which is widely accepted ESG standards have much larger operating margins than their peers who were slow to support sustainability. What’s more, mutual funds what to invest in ESGcompliant companies start to perform better than their traditional peer group. As ESG investments continue to climb, and the cost of capital becomes more attractive, returns are likely to rise. This will both further increase the attractiveness of ESG investment among fund managers and have a broader indirect impact on investment decisions.
Insurers can also increase their commitment to sustainability by managing their fixed assets more effectivelyeffective. Buildings make up as much as 40 percent of the European Unionannual energy consumption and 36 percent of its CO2 emissions; even more than the transport sector. By iinvestment in energy-efficient buildings, renovation their extended office and housing assets, reduce power consumption and usage environmentally friendly sources of electricity, insurers can make great progress achieve their sustainability goals. Using adanced digital technologies to collect and analyze large volumes critical from various sources, they can be dramatic improve their energy management. We helped to a European retailerfor example, reduces its total energy cost by 50 percent.
“Less than a third of consumers trust insurers to look after their personal data.”
Greater support for sustainability will help insurers gain greater trust among their customers. Consumer confidence in insurers has declined over the past few years. Less than a third of consumers trust insurers to look after their personal data, for example. This was an important finding of ours 2020 Global consumer study on financial services. In the previous year, 40 percent of consumers expressed confidence in the ability of their insurer to look after their personal data.
The COVID-19 pandemic seems to have weakened confidence in particular consumers in Europe. Only half of the insurance customers we hacked in Europe for our consumer pulse survey believe that their supplier has given them the necessary support to consequences of the pandemic. In North America, the figure was nearly 70 percent. However, communication is an area that most insurers need to improve. Only one in five insurance customers believe that their provider has clearly and effectively communicated with them when responding to the pandemic.
Insurers adjusting their assets under management to support ESG initiatives will undoubtedly strengthen their sustainability evidence. However, to foster greater trust with their customers, it is theirIt will also be must communicate better with their policyholders. Sharing their sustainability goals and achievements with consumers who are increasingly concerned about the well-being of their communities and their natural environment is a welcome move. Sustainability is an issue that affects us all.
For more information on how carriers can transform themselves ssustainable iinsurers look at the links below. Alternatively, send me a message. I would like to hear from you. Wish you and your loved ones the very best in 2021.
Five predictions for the insurance industry in 2021 – Kenneth Saldanha.