Sustainable Insurance without Change Management

Wiesbaden/Munich – ESG transformation is in full swing in the insurance industry, but in many cases it is not yet being managed as a professional change process: 42.1 percent of the insurance companies surveyed state that the socially growing and regulatory requirement for sustainability does not lead to a change management process within their company. Only 57.9 percent associate sustainable insurance with such a process. This is a key finding of the “Sustainable Insurance” study by Union Investment and RheinMain University of Applied Sciences in cooperation with viadoo GmbH, which was presented at the 9th Wiesbaden Insurance Congress.

The survey, conducted by Prof. Dr. Matthias Müller-Reichart, holder of the Chair of Risk Management at RheinMain University of Applied Sciences, examined the implementation of sustainability principles in insurance business processes. Together with viadoo founder Dr. Dominik Faust, the study also explored the extent to which sustainability is driving change in insurance companies—and how professionally this change is being managed.

One open-ended question contributed by viadoo to the study was: “Is the growing societal and regulatory importance of sustainability leading to a change management process in your company?” The responses show that in many companies, the primary focus is on the technical implementation of regulatory requirements. Yet today, ESG requirements affect the entire organization – from strategy and governance, finance & taxes, product development, marketing & sales, and communications, all the way to relationships with partners and service providers.

Multitude of requirements

The extent of the pressure to implement these changes was also evident at the 9th Wiesbaden Insurance Congress. Kristina Stiefel, a long-standing expert in Risk & Regulation and ESG Insurance and a partner at PwC, pointed to the multitude of requirements that insurance companies must address in addition to their day-to-day business. These include, among others,

• the BaFin guidance on managing sustainability risks for the financial services industry from 2019,
• the EU Taxonomy Regulation of June 2020 (2020/852),
• the Sustainable Finance Disclosure Regulation (SFDR) of March 2021,
• the draft Corporate Sustainability Due Diligence Directive (CSDDD) of February 2022, and
• the Corporate Sustainability Reporting Directive (CSRD) including ESRS of June 2022.

Added to this are the initiatives of the German Insurance Association (GDV) from January 2001. According to Götz Treber, Head of the GDV’s Center of Excellence for Corporate Governance and Regulation, large financial service providers must already address sustainability reporting this year, even though it will not become mandatory until next year. The reason: Comparisons with the previous year must already be included in the 2023 reports.

Too little attention to human aspects

The study also shows that the human side of the transformation has often received too little attention so far. Even among the nearly 58 percent of respondents for whom sustainable insurance triggers a change management process, only one organization explicitly mentioned the importance of the human factor. They stated: “We need to reach a point where all employees independently consider the issue and integrate it into their work and processes.”

This is a relevant finding for insurance companies. After all, sustainability can only be effectively embedded in the long term if, in addition to processes and structures, mindset, corporate culture, participation, and communication are also specifically developed. Large companies have already created their own organizational structures for this purpose, such as a sustainability steering committee or the role of a Chief Sustainability Officer (CSO). Smaller companies are often still in the early stages here.

Sustainable Insurance is a “moving target”

The study results make it clear: Sustainable Insurance is a “moving target.” The transformation is underway but not yet complete. For decision-makers in the insurance industry, the question is therefore increasingly not only what needs to be implemented from a regulatory perspective, but also how this change can be successfully shaped in terms of organization, communication, and culture. It is precisely at this intersection that viadoo GmbH supports insurance companies in not only implementing ESG from a technical standpoint but also embedding it sustainably within the organization.

Data basis: The study is based on extensive surveys of various insurance groups (n = 19). These included both large and small mutual insurance associations (VVaG), stock corporations from Germany and Austria such as Generali Versicherung AG, as well as public-law insurance institutions such as Versicherungskammer Bayern. The results are representative of the German insurance market.

Disclaimer: The Munich-based principal bank of viadoo GmbH is one of over 800 cooperative banks in Germany that, through their associations or holding companies, are shareholders (minority shareholders) of Union Asset Management Holding AG (“Union Investment”).