ETF usage among European insurers increases by 13% since 2019

Written by Adam Cadle

20/07/2020

ETF usage among insurers in Europe has increased by 13% since 2019.

According to a report published by Goldman Sachs taking into account the views of 273 global insurance participants, ETF usage in Europe has risen from 39% to 52%. A majority of insurers use ETFs for a portion of their equity and/or fixed income allocations. This remains particularly true in Asia Pacific, where 72% of respondents reported ETF use, marginally higher than last year.

Consistent with 2019, insurers who invest in fixed income ETFs most commonly use the allocations for short-term tactical exposure and/or operational efficiency.

Year-over-year, ETF usage in the Americas and Asia Pacific has remained fairly stable.

ESG has consistently grown in importance to insurers globally over the past four report editions. In 2017, the majority (68%) of respondents did not report ESG to be an investment consideration or applicable to their investment processes. This stands in contrast to the majority (79%) of global respondents in 2020 who believe ESG to be an investment consideration.

ESG continues to be a stronger investment consideration in Europe and Asia Pacific than in the Americas. The use of negative screening and avoidance tools is driven by insurers in Europe and Asia Pacific. In the Americas, 42% of insurers choose not to implement negative screening and avoidance tools in their investment process, in comparison to only 15% in Europe and 9% in Asia Pacific.

Despite a broader trend in adoption, however, insurers unanimously find continued hurdles impeding implementation of ESG strategies. Insurers globally find that access to reliable, standardised data is the primary hindrance to ESG implementation. Just 5% of insurers report no challenges to adoption.

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