Insurance industry in the scope of sustainable development

Abstract

Subject. This article discusses the role of insurance sector in promoting the ESG agenda and sustainable development issue. Objectives. The article aims to determine the role of insurance in the sustainable development concept, consider the core principles of the green agenda, proposed by the UN and corresponding associations founded by it and supported in the financial sector, and review the European insurance and reinsurance companies' activities in terms of obligations arising from the sustainable insurance requirements. Methods. For the study, I used the methods of systems and comparative analyses, synthesis, and comparison. Conclusions. The insurance industry, together with other financial and non-financial institutions, supports the worldwide reduction of greenhouse gas emissions and contributes to the goal of limiting global warming to 1.5?C above pre-industrial levels. United by this target, the industry is currently moving through a voluntary regime of ESG-oriented topics to a more regulated and compulsory one that provides for more sophisticated reporting rules, disclosure, and transparency. ESG principles change insurers' risk appetite concerning both underwriting and investment aspects, making companies more sensitive to climate-related risks that, as a consequence, leads to revision of existing own risk and solvency assessments models. The path to sustainable insurance has already become visible and is performed via cut of investments from carbon-intensive industries, change of underwriting principles in terms of exit from not-green products and decrease of own emissions. At the same time, the growing awareness defines the place of climate risk in own risk and solvency assessment models.