Sompo to integrate ESG factors in underwriting process
Property/casualty insurer Sompo Japan Insurance (SJI) plans to integrate environmental, social and governance (ESG) factors into its underwriting.
The insurer has also indicated that it will subject its future underwriting of construction insurance policies for new coal-fired plants to the new ESG underwriting process, meaning that it could no longer provide coverage to new plants that it deems inefficient from a carbon emissions perspective.
According to Moody's, the move makes Sompo the first large Japanese P&C insurer to address ESG factors in the underwriting process on a corporate-wide basis.
The ratings agency sees SJI's new underwriting process as "credit positive" as it will reduce ESG risks in its insurance policies.
It believes the integration will strengthen the evaluation of key ESG risks, such as its underwriting of businesses that contribute to climate change, and human rights violations.
The underwriting process will also aid the insurer in deciding as to whether it will underwrite a potential insurance policy, in addition to its traditional underwriting criteria, Moody's said.