Insurers have been told that there is no time to lose in driving ESG both in their businesses and those of their clients.
The programme leader for the United Nations Environment Programme’s (UNEP) Principles for Sustainable Insurance (PSI), Butch Baccani, told a webinar of marine insurance leaders that things have to change.
The event organised by the International Union of Marine Insurance (IUMI) and Mr Baccani said while the number of firms which have signed up for the PSI is 150 and growing that interest needed to be converted to tangible action.
He highlighted the fact that not only did the industry have the skills to identify and manage risk, they also had the ability to de-risk many of the threats that the world now faced. It also was one of the world’s biggest investors and asset managers. Those investments needed to confirm with the PSI and its aims around ESG.
Mr Baccani, said while climate change, and biodiversity were key issues ESG also looked at human rights, governance and corruption, all of which needed to be addressed.
“You need to set targets at a company level,” he said. “We then, as a community, need to monitor how the industry is performing.”
Focusing on the maritime sector he said that the financial services sector had the ability to make a huge contribution to driving a sustainable marine economy.
Patrizia Kern-Ferretti, Head of Marine at Swiss Re Corporate Solutions who also has responsibility for driving the operation’s sustainable efforts said the company had walked away from risks that they believed were having a negative impact on the climate and the planet.
“It is not an easy decision to make,” she explained. “Of the seven risks we exited three were claims free so these were not all poor risks from an underwriting point of view. However, sustainability is more important than premium income.
“For the marine market and the current conditions, it is a difficult position but our underwriters understand the position we have taken on the issue.”
Ilias Tsakiris, CEO of American Hellenic Hull Insurance, one of the first signatories to the PSI, said the marine sector needed to clamp down on poor owners and vessels.
He said the industry needed to take a stand and raise its standards in terms of what it expected from owners and the quality of the vessels they put to sea.
“Substandard vessels should become uninsurable to protect not only the crews but also the environment,” he said.
For the marine hull market underwriters need to look are core issues such as climate change, sustainability, illegal fishing, and plastic pollution, all of which were currently pressing issues.
When asked is the COVID pandemic had impacted UNEP’s efforts to drive the PSI Mr Baccani said; “COVID is a sign of the planet’s failing health. It is a result of natural degradation and the loss of natural habitats.”
He also called in the marine insurance industry to refuse to insure vessels which were undertaking in illegal, unreported or unregulated (IUU) fishing.
“We have issued guidelines on how to identify vessels which are undertaking IUU fishing and we would ask the insurance industry to refuse to provide insurance for these vessels, given the damage they are doing to the sustainability of the world’s fishing stocks.”