Insurers contribute up to $5.5trn a year to global financial resilience, report finds

Written by Michael Griffiths

10/11/2022

Insurers are contributing up to $5.5trn per year to global financial resilience through insurance claims and benefit payouts, the Geneva Association has estimated.

A new Geneva Association report, titled The Role of Insurance in Promoting Social Sustainability, suggested that insurers are rising to the world’s sustainability challenges.

To further advance social sustainability, the report has advised insurers to hone their impact underwriting and investing activities, as well as due diligence on risks linked to their clients, investees and operations, from human rights violations to algorithmic bias.

The Geneva Association report has also put forward a framework for insurers to assess their “social footprint”, which has been inspired by the Greenhouse Gas Protocol’s scope one, two and three approach to carbon emissions disclosure.

“Clearly businesses need to do more to promote social sustainability, particularly in light of the repercussions of the pandemic and Russia-Ukraine war,” commented managing director of The Geneva Association, Jad Ariss.

“Insurers have always been – and will continue to be – at the forefront of this agenda; the very essence of the insurance business is protecting society, providing financial security and peace of mind, and supporting recovery from shocks. That said, insurers can build out their impact in this space and need to address the absence of suitable metrics. We hope our report serves as a guide.”

Author of the report, and director of socio-economic resilience at The Geneva Association, Kai-Uwe Schanz, added: “The report recommends insurers to adopt a three-tier approach to managing social sustainability.

“First, maximise the inherently positive social impacts of insurance; second, protect those benefits by carefully mitigating potentially negative impacts; and, third, explore the scope for additional, commercially viable social benefits.

“Based on this approach, we believe that insurers can further enhance their role in providing socially relevant products and working to close protection gaps. This is more important than ever as the transition to a net-zero economy needs to be socially just and inclusive.”

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