A new era dawns for global insurance

Ian Kirk, CEO of Santam

United Nations and world leading insurers launch insurance principles at Rio+20 this month to propel sustainable development

The United Nations Conference on Sustainable Development, known as Rio+20, to take place in Rio de Janeiro, Brazil between 20 June 2012 to 22 June 2012, marks the launch of the United Nations Environmental Programme Finance Initiative (UNEP FI) Principles for Sustainable Insurance (PSI) to promote the adoption and implementation of these principles globally. Santam, the largest short-term insurer in South Africa is proud to be a founding signatory of the UNEP FI Principles of Sustainable Insurance.

In early 2011 Santam, co-hosted a meeting convened by the UNEP FI whose mission it is to engage the world’s insurers in defining, and adopting, a set of principles for sustainability in the sector. Santam is recognized as having taken the lead to position the insurance industry as a lever for a green economy and sustainable development.

“These principles are of great significance to the global insurance industry. They address systemic risk and change, and how to ensure that the sector remains sustainable in the face of profound change in, for example, socio-politics, climate, regulatory and public policy environments,” says Ian Kirk, CEO of Santam.

The global insurance industry has mainly focused on refining the quantification, differentiation and pricing of the risk exposure of insured assets. However, the findings of recently published Santam sponsored research study in the Southern Cape’s Eden district call into question a sole reliance on this risk assessment strategy, and identify the need for a more proactive risk management approach.

The world is facing increasing environmental, social, and governance (ESG) challenges changing the risk landscape considerably. Insurance is a crucial enabler of a sustainable economy. As risk managers and risk carriers, the insurance industry plays an important role in fostering sustainable economic and social development.

The ‘Principles’ aim to build on the foundation that the insurance industry has laid in supporting a sustainable society and are the result of a six-year global development process carried out by UNEP FI and signatory companies will publicly disclose their progress in implementing these principles on an annual basis.

The principles are as follows:

1. We will embed in our decision-making environmental, social and governance issues relevant to our insurance business.
2. We will work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions.
3. We will work together with governments, regulators and other key stakeholders to promote widespread action across society on environmental, social and governance issues.
4. We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the Principles.

“Santam’s brand position of ‘Insurance, good and proper’ entrenches the concept that our value proposition extends beyond premium rates. As a founding signatory of the UNEP FI Principles of Sustainable Insurance, our values are complimented. We recognise that insurance plays an active role in promoting pragmatic and collaborative systemic risk management in society and the economy,” says Kirk.

“As industry leaders we understand that systemic events can have a significant impact on our operations. The UNEP FI principles give us a good foundation to spread this message. We look forward to ground-breaking work and insights as we move forward on the sustainable insurance journey,” concludes Kirk.

The Rio+20 global conference will see the dawning of a new era for the global insurance industry, and for the billions of private individuals and entities (both corporate and private) that these world leaders insure.