ESG continues to act as a catalyst for change across business operations and culture, with its reach having extended to the UK SME sector. What does this mean for SME commercial insurers and can they use ESG data to better assess risk and create competitive advantage?
In May this year, Insurance Post, in collaboration with CRIF, carried out an ESG survey with commercial insurers to get the inside track on how ESG data is being used to drive growth, further sustainability and protect their reputation or improve compliance. The findings suggest there are untapped opportunities for insurers to exploit.
A key distinction between SMEs and larger corporations is that the latter typically publish and promote their ESG scores on their websites. In contrast, obtaining ESG data from small and medium enterprises is more difficult and slows down the onboarding and renewal processes, thus creating a sales barrier for insurers and brokers. Consequently, this information is often incomplete at best, or entirely unavailable.
Today, new ESG SME data and insights, extending well beyond traditional environmental metrics, are readily accessible. With just a company registration or VAT number, it’s possible to obtain an ESG score along with detailed ESG indicators, without requiring any direct involvement from the company. For example, insurers can gain valuable insights into their customers, including missing data, waste management, water usage, health and safety records, modern slavery, and diversity and inclusion practices.
But to what extent do insurers incorporate ESG data to better assess their clients’ risk and optimise pricing? Do they already use ESG indicators and granular data for risk assessment? How embedded is ESG data in insurers’ product/service development?
Read ESG Spotlight: Can SME commercial insurers drive profitable growth with ESG data?
