Unfathomable eco-friendly endeavors catching public attention
In the realm of insurance and beyond, sustainability is no longer a niche concern. Yet, striking a balance between addressing the growing calls for sustainability and avoiding it becoming mere marketing is a challenge for insurance companies.
According to a recent study by the 2021 Customer Monitor Insurance, half of decision-makers and influencers aged 18 to 69 in Germany consider sustainability important in risk management and saving for retirement, with 54% valuing it in insurance. However, only 13% would accept higher costs for sustainable insurance offerings.
Martin Gattung, founder and CEO of Aeiforia, emphasises that for sustainability to be seen as desirable, its benefit must be tangible in daily life. The study's findings suggest that the idea of sustainability alone is not enough to influence people's behaviour.
Insurance companies in Germany, exemplified by Allianz, are taking specific actions focused on integrating sustainability into their core business and investment activities. These include offering insurance products that support low-carbon and sustainable solutions, generating significant revenue growth from sustainable property and casualty insurance solutions, expanding sustainable investments, engaging with portfolio companies on sustainability issues, and making the claims process more sustainable.
Meanwhile, German financial authorities like BaFin emphasise the need for improved risk management of climate-related physical risks, disclosure, and proportionality in sustainability efforts. Other financial institutions and banks in Germany, such as Deutsche Bundesbank, DZ Bank, and Deutsche Bank, also embed sustainability by implementing climate risk assessments, offering green bonds and sustainability-linked loans, and aligning business processes with sustainable finance policies.
When compared to other industries, the insurance sector’s focus uniquely combines product innovation, investment strategy, claims/process management, risk management, and regulatory oversight. While other industries pursue sustainability on operational and product levels, insurance companies integrate it deeply into financial offerings and risk governance.
However, the insurance industry lags behind other sectors such as food, energy, and travel in terms of the importance placed on sustainability. About 48% of participants consider sustainability to be of high importance in their lives, while 51% see it as of medium or low importance. The preference for regional solutions in claims handling is similar.
In conclusion, German insurance companies are taking comprehensive actions spanning sustainable insurance products, green investments, responsible claims management, and active corporate engagement. These are closely aligned with regulatory requirements, setting their sustainability efforts apart by the financial sector’s dual role as both risk carriers and investors. While other industries pursue sustainability on operational and product levels, insurance companies integrate it deeply into financial offerings and risk governance.
The science of environmental-science plays a significant role in helping insurance companies understand and manage climate-related risks, such as extreme weather events and sea-level rise.
Balance in the finance sector is crucial, as insurance companies must find a way to offer sustainable insurance products while ensuring they remain affordable for the lifestyle of their customers.
The landscape of business in Germany, particularly within the insurance industry, is evolving to prioritize sustainability not just as a marketing gimmick but as a core part of their operations and financial offerings.
