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The relevance of sustainable insurance in Europe




As the effects of climate change increase and interest in renewable energy peaks, sustainability becomes a key priority for companies in all sectors – but insurance companies have the advantage of providing long-term solutions.

Sustainability is a versatile responsibility. Companies must ensure that their internal environmental, social and governance principles (ESG) are in line with best practice and good ethics, while at the same time finding ways to help improve society at large and the environment. The insurance industry has unique opportunities to make a powerful contribution to sustainability, both as investors in sustainable initiatives and as a supplier of climate protection protection for our customers.

Insurers as investors in sustainability

Investments in sustainability have the power to make a big impact. The European Commission reports that in order to achieve its climate and energy targets for 2030, Europe must bridge an annual investment gap of € 260 billion. Insurance has the ability to take big steps towards this goal. Insurance Europe reports that the insurance industry is Europe̵

7;s largest institutional investor and an important provider of stable, long-term financing for states and companies. A 2019 report from Insurance Europe also noted that European insurance companies planned to allocate around € 150 billion to sustainable investments by 2020. This investment is a direct result of the insurance business model, where policyholders pay premiums in advance, which are invested until damages and benefits fall due. .

Take the example of an insurer in the Netherlands that is a partner in a € 300 million fund dedicated to more sustainable schools, theaters and other public buildings. In Sweden, insurance companies’ investments in green bonds issued by the City of Stockholm in 2018 have successfully financed projects that include energy-efficient homes, electricity supply points for electric cars, schools and a modern wastewater treatment plant. The insurance companies also contribute to sustainable communities, with Austrian insurance companies’ investments leading to the creation of more than 100,000 apartments with affordable rental housing.

Sustainability through insurance products and risk management

Insurance companies also play an important role in preparing customers for the effects of climate change. According to Accenture’s latest Insurance Consumer Study, there is a growing demand for sustainable insurance products. For example, millennial and younger consumers (18 – 34) have expressed a greater interest in digital offerings that help them make safer, healthier and more sustainable choices, with digital experiences that encourage sustainable travel and shopping practices.

Take the example of Healthy Cities by Sanitas Initiative. The project was born with the goal of concretizing the relationship between health, environment and mobility in European cities. It brings together companies, employees, public institutions, NGOs, industry associations and foundations around two common goals: the fight against a sedentary lifestyle and the transformation of European cities into healthier and more sustainable environments. By measuring steps taken by customers and setting goals, Sanitas responded by donating to greener public infrastructure each time a goal was reached. The fifth edition of the ‘Healthy Cities by Sanitas’ initiative was recently completed, with more than 2.3 billion steps collected by the employees of the 40 participating companies. Everyone has worked together to fulfill the company’s commitment: to make a donation to a city renewal project in Madrid that helps protect the health of its residents. This was a 75 km forest belt that will border the city.

Risk management, identification and recovery form the basis of the insurance business model. Here, European insurers can have a positive impact on sustainability by offering customers sustainability incentives (as in the example above) and updating our risk assessment and insurance policy to improve how long-term climate change is taken into account, thereby developing tailor-made products for consumers with different environmental risk profiles. At a broader level, insurance companies are well positioned to assist European decision-makers with tools such as risk zoning and mapping and to contribute to a better understanding of climate threats through forward-looking risk models. Some national insurance associations have also collaborated with public authorities to share and analyze data on climate-related losses.

In conclusion, insurance has a key role to play in promoting sustainability in Europe and the rest of the world. These efforts can take several forms. But in order to have a complete view of sustainability, we must explore what sustainability means and how this definition has been expanded. In this series, I will look at the important ways in which insurers can pursue sustainable goals in the European market and illustrate companies that excel in this regard.


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Disclaimer: This content is provided for general information purposes only and is not intended to be used in consultation with our professional advisors.


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