A change in public awareness initiated by the United Nations (UN) Sustainable Development Goals, the Paris Agreement on Climate Change or the work of the International Maritime Organization (IMO) for example, has led to increased expectations of insured entities, insurance stakeholders and the public with regard to insurers’ responsibilities.
This led to a reconsideration in the marine insurance industry of core targets and responsibilities. The growing pressure and urgency across all sectors of society to respond and find solutions to sustainability challenges made insurance companies understand that they have a responsibility for these factors beyond their core traditional businesses. These insurance companies work on a better understanding and overarching principles for the underwriting of environmental, social and governance risks, in short ESG risks.
In 2012, the UN Environmental Programme Financial Initiative UNEP FI launched the UNEP FI Principles for Sustainable Insurance. The four principles serve as a global framework for the insurance industry to address ESG risks and opportunities. Over 120 organisations worldwide have adopted the four Principles for Sustainable Insurance, including insurers representing more than 25% of world premium volume.
In 2019, the UNEP FI launched the first guidelines for the “Underwriting environmental, social and governance risks in non-life insurance business”. It is meant as the first ESG guide for the global insurance industry developed by UN Environment’s Principles for Sustainable Insurance Initiative. It is subject to a public consultation in 2019 and the aim is to produce a full 1.0 version of the guide by the end of 2019.
IUMI has recognised a number of its current policy agenda topics where ESG principles already have an impact such as sanctions and polar shipping. Other policy agenda topics where ESG risks and questions are touched upon are currently under consideration either by IUMI or IUMI’s membership, for example human rights insurance clauses, illegal fishing, conflict minerals or anti-bribery. Environmental issues are already on IUMI’s agenda such as ballast water management systems for ships or the IMO low sulphur regulation coming into force in January 2020.
Based on these developments, the IUMI Executive Committee and IUMI Policy Forum have decided that IUMI will develop an opinion on ESG risks and play a role in guiding the marine insurance industry in dealing with ESG topics. IUMI plans to facilitate a dialogue within the IUMI membership about ESG risks and addressing IUMI members’ position on ESG risks towards public stakeholders, authorities and industry partners. IUMI will not bind its members with overarching commitments but will enable its members to decide on their own action and commitments in a transparent manner and on a fully educated level.
In a first concrete step, IUMI is currently taking part in the consultation process of the UNEP FI guideline for the “Underwriting environmental, social and governance risks in non-life insurance business”. Butch Bacani, Programme Leader “UN Environment’s Principles for Sustainable Insurance Initiative” at UNEP FI will introduce the topics in the Policy Forum workshop during the IUMI Toronto conference in September 2019.