The insurance industry has incorporated sustainability into its operations. The circumstances in each country are different, but there is a clear understanding that this is the right path to follow. Because of this, the central theme of the 38th Western Hemisphere Insurance Conference, FIDES Rio 2023, is “Insurance for a More Sustainable World.” The meeting, to be held from September 24 to 26 in Rio de Janeiro, will debate and share experiences on various topics, but all of them are related in some way to the sustainability agenda.
Preparation for the conference debates took place during the FIDES Brazilian Workshop on Innovation in Insurance, held in April, which brought together representatives of insurance associations from Brazil, Argentina, Paraguay and Uruguay. Organized by Brazil’s National Confederation of Insurers (CNseg), this event discussed the adoption of best practices related to environmental, social and governance (ESG) issues by insurance companies. In addition, another important topic, cybersecurity, was addressed.
Climate change and other environmental issues are having major impacts on the insurance sector, not least because extreme weather events are causing higher claims in various types of insurance. One significant statistic in Brazil is that 86.4% of CNseg’s member insurance companies have already integrated ESG issues into their business strategies, according to CNseg’s latest Insurance Sector Sustainability Report.
In other Latin American countries, the sustainability agenda is expected to become increasingly prominent. For example, according to representatives of the insurance sector in Argentina, Uruguay and Paraguay, executives in these countries are keen to move forward on this agenda, although many steps still need to be taken in this path.
In Argentina, according to the executive director of the Argentine Association of Insurance Companies, Gustavo Trias, it is necessary to expand the regulations that guide companies.
The director of the Uruguayan Association of Insurance Companies, Alejandro Veiroj, reported that Uruguay also lacks rules regarding ESG issues, but local companies have signed a memorandum of understanding to move in this direction. The same applies to Paraguay, according to the Paraguayan Association of Insurance Companies.
Different topics on the sustainability agenda are fundamental not only for insurance business strategies, but also for the insurance market to exercise its role of catalyzing responsible social and environmental practices in other markets. The financial markets have been stimulated by regulations to integrate social and environmental factors in risk analysis. Insurers understand that by including sustainability issues in their business models, they can influence their entire value chain. They are starting to demand commitments from their policyholders as a condition for taking out policies, including environmental liability insurance.
It is no wonder that insurance and finance are two of the most heavily regulated sectors. Regulatory agencies, in partnership with the markets, play a key role in this regard by promoting actions and dictating rules to promote a more sustainable economy.