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 $167 billion
* Source: European Environment Agency Report
**Source: US Environmental Protection Agency , in the Economist, March 2013
Corporate responsibility @ Munich Re
Megacities have challenges in environmental and
social terms
4
Since 2012: more than 50% of world population living in cities (e.g. approx. 80 % of
Brazil’s population - currently 196 million)
Challenges: efficient infrastructure, secure and affordable power supply, provision of
smart grids, sustainable mobility, greener buildings, bridging income disparity….
Source: UN 2002, Draft and Copyright: F. Kraas, Cartography: R. Spohner
Corporate responsibility @ Munich Re
Climate change caused by increased carbon
emissions is real – with huge economic losses Example hurricane Sandy 2012
5
Region Total losses Insured losses Fatalities
USA US$ 69bn US$ 30bn 110
Source: Peter Höppe
Corporate responsibility @ Munich Re
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
Corporate responsibility @ Munich Re 8
Munich Re supported the development of the
Principles for Sustainable Insurance (PSI)
*Source: UNEPFI Insurance Working Group, 2009
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 9
Contents
Corporate responsibility @ Munich Re 10
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
Corporate responsibility @ Munich Re 11
Global launch of the PSI: 19 June 2012, Rio de
Janeiro, Brazil
*Source: PSI, 2012
Growth in PSI membership
(June 2012 to March 2014)
Corporate responsibility @ Munich Re 12
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)
Corporate responsibility @ Munich Re 13
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
PS
I a
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PS
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An
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SI m
em
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ey
An
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SI sta
ke
ho
lder
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y
PS
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em
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ip g
row
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Annual PSI member exchange programme
Source: PSI Strategy 2014-2016
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 15
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.
Corporate responsibility @ Munich Re 16
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
Corporate responsibility @ Munich Re 17
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
Corporate responsibility @ Munich Re 18
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
20 Corporate responsibility @ Munich Re
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
21 Corporate responsibility @ Munich Re
For more information visit our Corporate Responsibility
Portal at …
…http://www.munichre.com/corporate-responsibility
22 Corporate responsibility @ Munich Re
• 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?
• ….
Corporate responsibility @ Munich Re 23
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
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