ExposureIQ provides a sophisticated platform that enhances the Insurance-Associated Emissions Solution’s functionality by offering advanced analytics, seamless data integration, and a user-friendly interface. This integration allows for efficient management and analysis of emissions data, streamlining workflows and supporting strategic decision-making.

The Insurance-Associated Emissions Solution supports regulatory compliance for insurers by providing emissions data and analytics aligned with PCAF standards, simplifying reporting processes. It caters to requirements from regulations such as the EU's Corporate Sustainability Reporting Directive, aiding insurers in navigating potential financial penalties and safeguarding their reputation through enhanced emissions disclosure capabilities.

By leveraging detailed account-level emissions insights, insurers can engage in meaningful conversations with their insureds about decarbonization strategies and sustainability practices. This proactive engagement helps build stronger relationships and encourages the adoption of greener practices across industries.

The Insurance-Associated Emissions Solution helps insurers accurately track and report GHG emissions, set and monitor decarbonization targets, and identify opportunities for emissions reduction. These capabilities support insurers in aligning their business operations with global sustainability objectives and contributing to the broader goal of transitioning to a net-zero economy.

Property and casualty (P&C) insurers looking to enhance their emissions reporting capabilities, comply with regulatory standards, and take proactive steps toward sustainability will find the Insurance-Associated Emissions Solution particularly beneficial. It is suitable for insurers of all sizes seeking to integrate emissions data into their decision-making processes.

Sustainability underwriting involves assessing the sustainability of companies seeking insurance or investment.

(Re)insurers use the insured’s sustainability performance metrics in their underwriting and portfolio management decision-making processes. This acts as an extra datapoint in the pre-bind risk selection based on their own view of sustainability risk. In addition, post-bind, (re)insurers can engage with their insureds, explain their approach to sustainability, and obtain information on transition plans.

P&C insurers are beginning to understand how sustainability can affect everyday business operations. P&C insurers can gain a competitive advantage by creating their own view of related risks.

By gaining perspective on sustainability-related risk drivers in their portfolios, insurers can redefine risk appetites and incorporate sustainability factors into underwriting and pricing decision-making processes. By reinforcing their expertise in sustainability underwriting, (re)insurers can more meaningfully engage with their insureds — especially those with emission-intensive activities — on their decarbonization strategies and net-zero transmission paths.

The three pillars of a sustainability insurance underwriting framework combine public and private company data, risk assessment, and analytics.

• Data management and validation: This includes corporate data on both public and private entities. This is necessary for insurers to identify the correct insured entity, unlocking the main information and datapoints.

• Sustainability-related risk assessment: Capture additional sustainability-related information to make an sustainability risk assessment. This requires insurers to redefine their underwriting risk appetites. An assessment typically combines a multi-step approach using sustainability insights, sustainability data, revenue data, and an overall assessment against defined criteria and categories.
   

• Analytics: Portfolio composition and point-of-underwriting risk analytics derived from the risk assessment help insurers identify the accounts that contribute to portfolio-level sustainability performance both pre- and post-bind.

Common challenges include linking the insured entity to an sustainability metrics to private entities.

Insurers are skilled at knowing what is insured, but there can be data challenges tracking who is ultimately insured. This usually arises from a lack of information provided at pre-bind, especially where data is provided via binders (a written copy of the binding agreement between the insurer and the insured). This creates complications when trying to tie the ultimate insured to sustainability datapoints, especially when some companies may contain similar names to others or data input errors.

Most insured portfolios are composed of public and private entities. Private entities are much less likely to participate in sustainability reporting compared with a major corporation such as a Fortune 500 or FTSE 100 company.

The solution to both issues is to source sustainability data from vendors who can also provide a name-matching service to apply the correct sustainability analytics to the relevant insured entity.

Approaches differ by insurer and are aligned to their own policies, procedures, and processes. Insurers need sufficient datapoints for each prospective insured to support high-quality sustainability metrics across the insureds’ portfolio, particularly for unlisted companies.

The right data on private and public companies is essential. For example, the underwriting process requires data to identify the correct insured entity, unlocking the sustainability datapoints to build an understanding of sustainability's impact on the portfolio.

Information then flows to the assessment framework, integrating sustainability insights into underwriting selection decisions. Insurers can also add their own views of sustainability-related risk and specific customer weighting for sustainability factors. Ultimately, the collected data and underwriting decisions enhance the transparency and accuracy of sustainability performance reports shared with both internal and external stakeholders.

Sustainability solutions for insurance underwriting vary from raw sustainability data to the application of solutions from the investment side to integrated sustainability underwriting solutions.

Sustainability underwriting solutions cover data, analytics, and technology tailored specifically to address the challenges P&C insurers face. Achieved progress includes:

• The development of commercial sustainability data solutions such as Moody’s collaboration with Chaucer to create the sustainability Insurance Underwriting Solution
  
  
• Collaborative efforts to standardize the data collected from policyholders; each organization then decides how to use the data
   
• Sector-specific emissions data initiatives such as the Poseidon Principles for Marine Insurance

Sustainability underwriting helps mitigate risk by providing investors with an unbiased view of the underwriting portfolio from an sustainability perspective.

As P&C (re)insurers continue their sustainability underwriting initiatives, the door is open to build competitive advantages and identify new business opportunities by imposing their own views of sustainability underwriting risks, redefining risk appetites, incorporating them into the decision-making process, and critically engaging with insureds.