Brokers are key in collection of sustainability data: Moody’s
Brokers have a key role to play in capturing more sustainability-related data at the point of underwriting – and they must also find a way to do it in a consistent manner across the value chain.
That was one of the key points made by Salman Siddiqui (pictured), senior director, insurance practice lead, Moody’s Analytics, speaking at Intelligent Insurer’s Climate Risk & Sustainability Europe 2023, being held in London today (June 7).
In a session called ‘Operationalise ESG into underwriting to establish sustainable underwriting guidelines for the future’ he noted that the whole area around ESG has moved very fast – even in the past 18 months. “It has gone from being almost unknown to having full conferences dedicated to it. But the pace of change is also uneven.”
He noted that many initiatives in the space historically have been driven by reinsurers or brokers. However, many aspects of ESG are now being led by carriers. “They want ESG metrics or data on the insureds. The issue the reinsurers have on the treaty side is the don’t have the data on the insureds. They have been looking at the underlying portfolio and trying to get sustainability impact score on that.”
He noted that RenRe is a leader in this space. He also said that PCAF, the carbon accounting framework, is incredibly useful and here to stay – despite the current difficulties of the Net-Zero Insurance Alliance (NZIA). “We still feel that net zero is here to stay so we need an accounting standard,” he said.
Another question is, he noted, how different parts of the value chain are looking at ESG. An important part of the answer to that, he said, could be found in the role of brokers. “A lot of work has been done but there is a debate about the role of the broker in the future. We believe it is about fulfilling the gaps in terms of data. But it must be done in a consistent manner across the value chain.”
He stressed that, with regards to ESG, it is subjective to some extent but there needs to be a coalescing around how the industry discusses ESG.
He noted that Moody’s has invested heavily in this space. It has developed an algorithm which can match policyholder database to an ESG database. In terms of private entities, it can also cover both public and private companies with ESG scores.
“We ensure we can cover a bigger portion of the portfolio. The technology is important in this regard. We have built what we use from ground up, specifically for the insurance market. The needs of underwriters are different to other users, which we recognise, so we have built what we have from the ground up. We are also working closely with the industry to find a common language and a common way of talking about ESG.”
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