Higher environmental, social and governance scores result in higher underwriting efficiency, in keeping with a brand new research from worldwide insurance coverage dealer Howden and specialty insurer Fidelis.
The report scrutinized loss ratios throughout 30,000 insurance policies, accounting for a premium worth of about $9 billion, matching them to third-party ESG scores. It is the biggest research ever carried out to ascertain a hyperlink between these elements, Howden mentioned.
The evaluation discovered that environmental scores have the strongest correlation with loss ratios. However, the research discovered that there’s variation throughout strains of enterprise and industries. Of the strains of enterprise examined within the report, property insurance coverage confirmed the strongest correlation between increased ESG scores and higher loss expertise.
“It’s great to see the proactive approach that Fidelis and other insurers are taking to better understand the link between ESG profiles and risk,” mentioned David Howden, CEO of Howden Group Holdings. “The data backs up our long-held belief that clients should be rewarded for high ESG credentials. This is an obvious way in which the insurance industry can support the transition. I hope to see, in the near future, ESG built into underwriting processes and pricing decisions to a much greater degree.”
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“This is a great example of the right thing to do also being the most profitable thing to do,” mentioned Richard Brindle, chairman, group CEO and chief underwriting officer at Fidelis. “Being able to articulate this link will become increasingly important to our interactions with key stakeholders, not least the investment community.”
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