Proportion of SFDR Article 8 and 9 unit-linked funds on insurers' platforms expected to grow by 15%

Written by Adam Cadle

02/12/2022

The proportion of SFDR Article 8 and 9 unit-linked funds on insurers’ platforms in Europe is expected to grow by an average of 15 percentage points to 32% over the next 12 to 24 months, therefore creating opportunities for external asset managers, latest research by Cerulli has shown.

Some 46% of the UK insurers, 44% of the French insurers, and 42% of the Italian insurers surveyed by Cerulli are seeking support from external managers.

Cerulli said it expects larger insurance firms to be quicker to adopt Article 8 or 9 unit-linked funds than their small and mid-sized counterparts. Insurers in Europe with assets under management (AuM) of €50bn (US$51bn) or more are expected to grow their share of Article 8 or 9 unit-linked funds by 17 percentage points to 36% in the next 12 to 24 months. In contrast, insurance firms with AuM of less than €10bn are expected to grow the proportion of unit-linked funds that either promote environmental, social, and governance (ESG) characteristics or have sustainable goals as their objective from 13% to 27% over the same period, an increase of 14 percentage points.

In Europe, Article 8 or 9 unit-linked funds are available mainly in the Netherlands and the U.K. However, French, and German insurance firms expect to increase the volume of sustainable unit-linked funds—the French insurers anticipate increasing their unit-linked funds classified as Article 8 or 9 by 24 percentage points over the next two years.

The key sustainability themes that insurers are focusing on vary by market, but most insurers across Europe are considering incorporating renewables, climate change, and biodiversity themes into their unit-linked fund offerings. 66% of European insurers plan to search for renewable energy strategies to structure their unit-linked funds in the next 24 months. Green buildings, affordable housing, and the UN Sustainable Development Goals are themes that are not expected to receive much attention from insurers in Europe.

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