Insurers Have No Choice But To Embrace ESG, Warns Continental Re CEO
Lawrence Nazare, CEO of Continental Re Group
By Liz Booth of Africa Ahead
Insurance businesses no longer have an option but to embrace environmental, social and governance (ESG) practices into every aspect of their operations.
That is the warning in a new report from Continental Re, ‘ESG: harnessing insurance markets to achieve a sustainable future’. Lawrence Nazare, CEO of Continental Re Group, has stressed that the drive for ESG frameworks in business has developed rapidly in the post-Covid-19 world and no business remains immune.
He said: “In the past, companies were heavily focused on corporate social responsibility but now a much broader demand is being made on businesses of all shapes and sizes. For insurers, this is not a business risk but a major opportunity to deliver.
“This is particularly true of the African continent, where millions of people are currently outside the reach of the financial services sector. These people are the most likely to be affected by potentially devastating impact of climate change.”
The good news, said Mr Nazare, is that there is also a sense of growing responsibility to deliver workable solutions to this group and to bring them into the financial services fold.
He said: “ESG has grand designs and ambition, but is it really possible for African insurers to take a lead on this? The answer seems to be a resounding ‘Yes’, if the industry can step up not just as an insurer, but as an investor and as an employer of many thousands of people.”
However, as Emeka Akwiwu, executive director at Continental Re, pointed out, insurance is about pooling risk and not taking on excessive amounts of risk to the point of becoming unsustainable.
It was a delicate balance, he said, and about being able to spread the risk of an event across a numbers of years. “One of the concerns at the moment is that we are occupying a space that our governments should be occupying.
“Insurance is about insuring fortuitous events as they happen. If I am providing cover and it is a one in 10-year event, I have nine years of opportunity to recover those claims costs should a claim be made.
“However, if a flood happens every year, it is no longer fortuitous, it becomes uninsurable, so we are putting ourselves under pressure to provide cover for events that have become predictable – that’s not insurance. We need to be putting our governments under pressure to play their part in providing adaptation that goes beyond mitigation. Then insurance can come in and provide cover in the failure of those adaptations.”
