A number of challenges remain for ESG in insurance, according to panellists at the World Captive Forum in Orlando. Marco Hensel, underwriting lead and senior vice president at HDI Global, considered the challenges for underwriters regarding how to price environmental policies, asking “should we place discounts on these policies?”. Other challenges highlighted included rating issues. Nate Reznicek, president and principal consultant at Captives.Insure, noted that there is a need for the industry to decide on one ESG measurement tool to allow for comparison between countries and increased transparency and accountability. Currently, several companies in the industry use in-house measurement tools. Hensel commented: “The industry needs to come together to agree on global standards.” Highlighting opportunities for captives, Hensel and Rezcinek discussed the potential for captives to fill gaps in the market created by the need for coverage for new and emerging renewable technologies. Rezcinek asserted that he would not take on a client who did not have a ‘valid’ ESG initiative in place and viewed governance as a ‘tick box exercise’. “A coal company, for example, would not align with [Captive.Insure’s] ESG policy,” he said. Similarly, Hensel remarked that “HDI believes in the transformation to clean energy and championing ESG. If a company doesn’t, then we’re not the right partner for them”. He also reiterated that environmental issues are not going away, and maintained that industry participants have to champion ESG to remain competitive. Hensel stated that many captives engage in these initiatives to “do the right thing”, as opposed to being induced by market pressures. Rezcinek confirmed these sentiments and said that it was easy for him to determine whether there is real purpose behind a company’s ESG factors, and that the outcome would be a key factor to whether Captive.Insure would work with that company.
