Linking life & health insurance with ESG

In an address to "The PSI After 10 Years" conference in Zurich to launch the guide, World Health Organization Director-General Dr Tedros Adhanom Ghebreyesus stressed the importance of health protection and the role insurance has in promoting it.

"Insurance can also be an important tool to protect health from the consequences of climate change, air pollution and environmental degradation," he added, linking human health with another of the world’s most pervasive challenges – the health of our planet.

Edward Moncreiffe, CEO of HSBC Life, the main corporate sponsor of the new ESG guide, highlighted that the publication represents "a coming of age for the Life & Health industry and reflects our firmly held belief that our core purpose – underwriting risk – has a critical role to play in facilitating better health and well-being."

How the guide will support the Life & Health insurance sector in achieving this goal was the core topic of a conference panel involving key contributors to the document.

The guide, put together under the auspices of the UN Environment Programme (UNEP), is the first ever "playbook" on underwriting Life & Health risks against an ESG background, explained the panel’s host, Butch Bacani, Programme Leader for the UNEP’s Principles for Sustainable Insurance Initiative. Download the guide here.

It covers the four Life & Health underwriting risks – mortality, longevity, morbidity and hospitalisation – and highlights the links to ESG factors such as climate change, infectious diseases, unsustainable practices and human rights.

"Compared to non-life insurance, there has generally been less of an understanding of the discussion on ESG issues for Life & Health insurance," said Amita Chaudhury
Group Head of Sustainability at AIA, one of Asia's largest insurance providers.

Chad Park, Vice President of Sustainability and Citizenship at The Co-operators group in Canada, agreed that the Life & Health branch of insurance has engaged less with ESG-related issues.

Chaudhury added: "The guide also provides some of the factors that we should be thinking about and considering, for instance, soil pollution or water pollution. It's a great comprehensive list of factors that have not previously been considered where we can assess risks."

"It has helped to extend the view of causes and effects in Life & Health insurance," continued Park. "We may have been underwriting some of these factors before, but not really paying a lot of attention to the underlying causes of those factors."

"Are there levers that we can pull with our business – whether directly in the Life & Health area or where there are connection points to other parts of the business – to help foster more attention to preventing those factors?"

Moira Gill, Associate Vice President for Environment, Government and Industry Relations at Canada's TD Insurance, agreed with the need to look across business units. "We have clients who have both Property & Casualty with us and also life insurance. So it's natural for us to look at the intersection of those risks."

Stefan Kröpfl, Global Head of Life Business Insights and Governance at Zurich Insurance Group, pointed to the opportunities in creating crossover between business areas.

"Corporate customers are very familiar with the idea of prevention on the Property & Casualty side, whether it's fire or flooding and flood-prone areas. One opportunity for us was to also extend that philosophy of prevention to the employees and the life side of our offering. What can we do in prevention rather than how can we extend exclusions?"

Panelists also stressed the importance of the guide's collaborative approach, and the opportunity to extend this into the future.

"As we progress on our ESG journey, as we take greater responsibility for building a sustainable future for Asia, the role of partnerships is enormous," highlighted AIA’s Chaudhury.

TD's Gill pointed out that with so many new and emerging issues affecting Life & Health underwriting, collaborative approaches will be critical to managing the growing stream of information underwriters need to absorb.

"Your reputation depends on being able to adapt to the new work that comes out. But it's not possible for insurance to be on top of all the new science. This type of collaborative forum provides the ability to do that, which I think is otherwise pretty much impossible for an individual company," she concluded.

Partnership will also be important when it comes to educating customers about their insurance options and how they can mitigate health risks. The advances in digitisation have enabled insurance companies to reach wider audiences, Gill explained, and there is a "golden opportunity" to build greater awareness of Life & Health risks as they relate to the environment and other factors.

The PSI ESG Guide for Life & Health Insurance Business is, clearly, only the beginning.