Sustainable Development and the Insurance Industry · CR increasingly considered a strategic...

Sustainable Development and the Insurance

Industry

Presentation at the Sustainable Finance Forum Turkey, 16 May 2014

Dr. Astrid Zwick,

Head Corporate Responsibility, Munich Re Group

Relevance of corporate responsibility for the insurance industry

A global voluntary framework - Principles for Sustainable Insurance (PSI)

Munich Re framework to integrate ESG aspects

Corporate responsibility @ Munich Re 2

Contents

Environment pollution impacts bears high economic

costs

3

Source: AP

EU*: Cost of damage caused by emissions from industrial facilities in Europe at least

EUR 102–169 billion in 2009

US**: costs to regulate air pollution $7 billion a year; health benefits range from $19

billion to $167 billion

* Source: European Environment Agency Report

**Source: US Environmental Protection Agency , in the Economist, March 2013

Corporate responsibility @ Munich Re

Megacities have challenges in environmental and

social terms

4

Since 2012: more than 50% of world population living in cities (e.g. approx. 80 % of

Brazil’s population - currently 196 million)

Challenges: efficient infrastructure, secure and affordable power supply, provision of

smart grids, sustainable mobility, greener buildings, bridging income disparity….

Source: UN 2002, Draft and Copyright: F. Kraas, Cartography: R. Spohner


Climate change caused by increased carbon

emissions is real – with huge economic losses Example hurricane Sandy 2012

5

Region Total losses Insured losses Fatalities

USA US$ 69bn US$ 30bn 110

Source: Peter Höppe


Regulation

Customers

Peers

Capital market /

Shareholders

Increase in national CR reporting

legislation (e.g. EU, F, D, UK, NL, S-Africa)

Climate regulation on the rise (e.g. UK

Carbon Commitment, China, India)

Increased demand for transparency

Change in customer behaviour (e.g.

LOHAS*)

Increase of SRI investments

Increased demand for information, also by

mainstream investors (e.g. Goldman

Sachs) and our shareholders

CR increasingly considered a strategic

element and business opportunity

Structured approach and central

governance boost CR topics

Public/NGOs

Increased media attention amplifies

reputational risks and demand on ethical

standards

* LOHAS = Lifestyle of health and sustainability Corporate responsibility @ Munich Re 6

Increasing relevance of corporate responsibility for

stakeholders and as a competitive advantage

The insurance industry – uniquely positioned to tackle

environmental, social and governance issues

7 *Source: The Global State of Sustainable Insurance, UNEPFI, Insurance Working Group, 2009

Global survey of insurance

practitioners* support that:

Sustainable insurance is not about

philantropy

Environmental, social and

governance (ESG) issues are

material to all lines of business

ESG management increases corporate

value through enhanced risk

management and new business

opportunities

Risk carrier

Risk manager

ESG issues

Investor

Sustainable insurance is about insurance industry core competence:

to identify / quantify risks & provide solutions Corporate responsibility @ Munich Re

ESG across industry sectors

ESG across financial sectors (banking, insurance and investment)

ESG by financial sector

Climate change by financial

sector

UN Global

Compact

Principles

UNEP Finance

Initiative

Statements

Equator

Principles

Proposed UN-

backed Principles

for Sustainable

Insurance

UN-backed

Principles for

Responsible

Investment

Climate

Principles

Climate

Principles

Climate

Principles

ClimateWise

Principles

Investment

framework


Munich Re supported the development of the

Principles for Sustainable Insurance (PSI)

*Source: UNEPFI Insurance Working Group, 2009





Contents


Principles for Sustainable Insurance (PSI) –

A voluntary and aspirational global framework for the

insurance industry

Principle 4

Reporting

Principle 3

Society

Principle 2

Insurance industry value

chain

Principle 1

Business principles,

strategies and operations

1. Embed ESG in decision-making along

the value chain

2. Work together with clients and business

partners to raise awareness, reduce risk

and develop solutions

3. Engage with governments, regulators

and other key stakeholders

4. Demonstrate accountability and

transparency


Global launch of the PSI: 19 June 2012, Rio de

Janeiro, Brazil

*Source: PSI, 2012

Growth in PSI membership

(June 2012 to March 2014)


27

7

34

42

26

68

PSI signatory companies PSI supporting institutions PSI membership (signatories + supporters)

Jun-12 Mar-14 Gross premiums written

About USD 500 billion or

10% of 2011 world

premium volume

Total assets

under management

About USD 5 trillion

Gross premiums written

About USD 660 billion or

15% of 2012 world

premium volume

Total assets

under management

About USD 8 trillion

*Source: PSI, 2014

PSI signatory companies

(country of domicile)


1. Achmea (Netherlands)

2. AEGON (Netherlands)

3. Aviva (United Kingdom)

4. AXA (France)

5. Bradesco Seguros (Brazil)

6. Delta Lloyd (Netherlands)

7. ING (Netherlands)

8. Insurance Australia Group

(Australia)

9. Interamerican Hellenic

Insurance Group (Greece)

10. Itau Seguros (Brazil)

11. La Banque Postale (France)

12. MAPFRE (Spain)

13. Mitsui Sumitomo Insurance

(Japan)

14. Mongeral AEGON (Brazil)

15. Munich Re (Germany)

16. RSA Insurance Group

(United Kingdom)

17. Sanlam (South Africa)

18. Santam (South Africa)

19. SCOR (France)

20. Sompo Japan Insurance

(Japan)

21. Sovereign (New Zealand)

22. Storebrand (Norway)

23. SulAmerica (Brazil)

24. Swiss Re (Switzerland)

25. The Co-operators Group

(Canada)

26. Tokio Marine & Nichido Fire

Insurance (Japan)

27. Zwitserleven (Netherlands)

1. Allianz (Germany)

2. AmGeneral Insurance

(Malaysia)

3. ASR Nederland (NL)

4. Atlanticlux (Luxembourg)

5. Banco Santander (Spain)

6. Continental Re (Nigeria)

7. Custodian & Allied (Nigeria)

8. FATUM Schadeverzekering

(Suriname)

9. Grupo Segurador Banco do

Brasil e MAPFRE (Brazil)

10. HSBC Insurance (UK)

11. Peak Re (China)

12. Porto Seguro (Brazil)

13. Seguradora Lider (Brazil)

14. TAL (Australia)

15. Terra Brasis Resseguros

(Brazil)

Founding signatories

Signatories after PSI

launch in June 2012

Status: March 2014

The PSI strategy for 2014-16 Moving from aspiration to transformation

Vision

Purpose

Sub-goals 1

• Promote the PSI Initiative and engage stakeholders

• Develop and implement projects and activities that focus on understanding and managing ESG risks

Sub-goals 2

• Understand and develop solutions to address members’ pain points

• Member exchange programme

• Cost-efficient delivery

Sub-goals 3

• Measure and report on the impact of the PSI Initiative on advancing ESG issues and the value created for members

• Embed a learning culture to foster continuous improvement

Goal 1:

Collaborative

action (external)

Goal 2:

Implementation

support (internal)

Goal 3:

PSI operations

(governance)

Projects and activities

Measuring the performance of the PSI Initiative

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Annual PSI member exchange programme

Source: PSI Strategy 2014-2016





Contents

Added value within the group

Diversified structure – More security

Munich Re (Group)*

Asset Management

Primary insurance

Reinsurance Munich Health

Belgium

Corporate Insurance Partner

Great Lakes Reinsurance (UK) PLC

KA Köln.Assekuranz Agentur GmbH

MSF Pritchard Syndicate 318

Temple Insurance Company

Watkins Syndicate

* This listing is incomplete and provides no precise indication of shareholdings.


Core activities

Corporate Responsibility is part of our core principles

Five action fields in accordance with our commitments

Strategy and

governance

CR1 objectives

and fields of action

Compliance with

UN Global

Compact

Principles

Corporate

responsibility in

business

Integration of CR

issues into

(re)insurance

business (PSI2)

Integration of CR

into asset

management

(PRI3)

Environmental

management

Group-wide CO2

neutrality

Global

environmental

management

strategy

Corporate

citizenship

Active

governance of

social

responsibility and

community

involvement

Reporting and

communication

Group-wide CR

web portal

Group-wide CR

reporting

Position in major

SRI ratings

1) CR = Corporate Responsibility

2) PSI = UN Principles for Sustainable Insurance (signed by Munich Re in 2012) www.unepfi.org/psi

3) PRI = UN Principles for Responsible Investment (signed by Munich Re in 2006) www.unpri.org

Action guidelines

“Sustainable value creation is key to the success of our business model. In this sense,

corporate responsibility has been and will always be an integral part of our Group strategy.

We put quality before quantity, enabling us to achieve profitable, long-term growth.“

Nikolaus von Bomhard, CEO


http://www.unepfi.org/psi

http://www.unpri.org/

Reinsurance

Focus on underwriting

process and guidelines,

client engagement

ERGO

Focus on sustainable

products, sales and

underwriting process,

compliance

MEAG

Adherence to PRI

(sustainability quota and

new reporting format)

Munich Health

Focus on primary

insurance units and

exchange of best

practices

Corporate responsibility governance

ESG aspects – Sensitive business issues

Sensitisation

PSI reporting PRI reporting

Initiatives across business fields and investments


A framework to integrate ESG aspects into business

strategies

Environmental, social and governance (ESG) aspects

Environment

Pollution

Natural resources & biodiversity

Social

Political context and public

awareness

Labour and working conditions

Health, safety and security for the

community

Displacement of people

Cultural heritage

Governance

Responsible and correct planning &

evaluation

Compliance

Consultation and transparency

19 Corporate responsibility @ Munich Re

Sensitive issues bear risks…

Banned Weapons

Policy on Cluster Munition and Land Mines

ESG Criteria for Engineering

ESG tool for engineering / large infrastructure projects

Oils sands

Position paper including specific questions on ESG aspects

Mining

Master Thesis: ESG aspects in the mining industry

Fracking

Position paper including specific questions on ESG aspects

Arctic Oil Drilling

Position paper in process in collaboration with Marine

Tax Haven

Investments in Farmland

ESG country rating: ESG information included in MR Country Risk Assessment


21 Corporate responsibility in (re)insurance business, 15 October 2013

REINSURANCE

Climate change

Nathan Risk Suite

Agro Systems

New coverage concepts in

the area of renewable energy

Public-private partnership

Weather-index-based

insurance

Desert power

CO2-free power generation in

North Africa

ERGO

Life insurance

Unit-linked life insurance with

investment in SRI products

Motor insurance

10% premium rebate for

environmentally friendly cars

Microinsurance

Range of insurance products (e.g.

property, personal accident, crop)

Mobile-phone-based insurance

solutions

MEAG

Sustainability anchored in Global Investment Guidelines

Investment in renewables and infrastructure

Provision of sustainability funds for third parties

ESG country rating

MUNICH HEALTH

Access to insurance

Managed care & prevention

Pilot product example: specific

solutions for special groups

such as Down (DKV Integral

Sin Barreras)

Inclusive business model

Fundación Integralia

...but corporate responsibility also means

business opportunities

Products and services according to business field specialty


For more information visit our Corporate Responsibility

Portal at …

…http://www.munichre.com/corporate-responsibility


• Why is the PSI Initiative relevant and what is the benefit to join it?

• What does it mean to implement the PSI?

• How can Corporate Responsibility (CR) be successfully integrated into

corporate strategies and into daily work of e.g. an underwriter?

• What are major challenges to implement CR in core business?

• ….


Questions for discussion?

Thank you very much for your attention

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16 May 2014

Dr. Astrid Zwick

Head Corporate Responsibility, Munich Re Group

Sustainable Development and the Insurance Industry · CR increasingly considered a strategic...

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