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Insurtech- The Power To Make ESG Happen
ESG InsurTech

Insurtech- The Power To Make ESG Happen

By Rajarshi April 08, 2022 - 286 views

ESG (environmental, social, and governance) criteria are a set of standards that are creating a splash across boardrooms. It suffices to say that ESG will play a defining role in future operations across all business sectors and insurance is no exception. In this context, insurtech can play a pivotal part in driving seamless ESG adoption. The interesting bit here is that many societal components have an equally crucial role in spurring ESG adoption. It is but natural that insurers are steadily taking up technology as a pillar in this regard.

Insurtech And ESG- How They Are Linked

The insurtech space could accelerate ESG for the entire insurance industry according to experts like the founding partner at Eos Venture Partners, Sam Evans. Insurance is what offers security against mishaps, and unfortunate natural disasters enhance financial strength and offer protection in case of any death or injury to policyholders. It also plays a part in enhancing the overall well-being of policyholders.

Several core components in ESG are also connected to data and technological tools, which are naturally the prerogative of the insurtech space. Right from enhancing healthcare/wellbeing quality to higher engagement with un/underserved communities to filling up the gaps in protection and coming up with metric-driven solutions or tapping into big data, insurtech is expected to do its bit in ensuring the biggest premise or principle of all- Fill up the gap in protection.

Aspects Worth Noting

  • Insurtech will be closing up the gap in protection worldwide, estimated at $1.24 trillion as of 2020 by Swiss Re.
  • This has exponentially gone up on account of several reasons including natural calamities, extreme climatic conditions, weather, and increasing environmental issues. These aspects impact both developing and developed nations.
  • For example, a report states that 4 out of 5 homes in the USA still do not possess flood insurance while estimating that savings and/or insurance do not cater to more than 10% of the protection requirements of the population in developing countries.
  • More employees are becoming a part of the freelance/gig sectors where it is common to work part-time, remotely, or in temporary positions while companies hire workers for short-term duties. They are also bereft of easy access to more affordable protection/coverage since conventional products are sometimes not tailored for their needs.
  • The risk type is sometimes misperceived and not priced fairly owing to the dependence on aspects like credit ratings which are steadily becoming obsolete.

How Insurtech Can Help

  • Insurtech ensures growing technological solutions for various issues, enabling monitoring in real-time along with risk mitigation development, recovering from disasters, or coming up with a blueprint for prevention.
  • Technological tools also enable insurance companies to provide suitably customized, more affordable, or fairly priced and use-based products/coverage while being able to access newer demographics that were out of bounds earlier.
  • Insurtech is accomplishing this through solutions like tapping infrastructure for mobile banking, enhancing overall health and wellness, and coming up with platforms for managing risks and related coverage needs.
  • Insurtech entities also offer more support for enhanced design of products inclusive of metric-driven solutions which create a more integrated mechanism, enhance coverage, reduce costs and scale up efficiency in various areas like the settlement of claims.
  • In an indicative instance, imagine a technology-driven insurance platform that guarantees claim payouts upon specific instances leading to damages, especially in weaker economies.
  • ESG data may be tapped for boosting underwriting, via the application and identification of predictive ESG-based indicators.
  • Many insurtech players are also covering aspects like green innovation, lowering carbon footprints or emissions, and other environmental problems.
  • Geospatial and tech-driven analytics will help in analyzing the effect of natural disasters or calamities while building abilities for disaster recovery and mitigation.
  • Another emerging solution is global surface intelligence which helps in using unique technologies for combating environment-related activities. The platform helps in the aggregation of satellite images along with using machine learning, image processing, and predictive forecasting/analytics for offering more insights into the management of natural resources or sustainable practices.

Signing Off

Even Deloitte has stated how insurance companies are increasingly appointing chief sustainability officers in response to ESG demands while investing more in insurtech solutions for better metrics in line with the same. The ESG concept is being more efficiently integrated into the entire underwriting journey. Scoring systems, tools for analysis, and other insurtech products may help in driving ESG-compatible development of insurance products. Right from the industrial, household, and automotive sectors to healthcare, there is a diverse scope of application.