How ESG is Reshaping Life and General Insurance Portfolios

As climate risks grow and societal expectations shift, Environmental, Social, and Governance (ESG) principles are redefining the way insurance companies operate and invest-globally and in India.

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Once seen as compliance tools, ESG frameworks are now strategic imperatives influencing underwriting policies, investment choices, risk management practices, and product innovation.

Global Momentum in ESG-Driven Insurance

Globally, insurers are moving from passive ESG alignment to active integration. European insurers, in particular, have taken the lead by aligning portfolios with the EU Sustainable Finance Disclosure Regulation (SFDR) and net-zero targets. US-based insurers are increasingly incorporating climate risk stress testing, while Asia-Pacific markets are innovating around parametric insurance and biodiversity-linked underwriting.

International insurers such as AXA, Allianz, and Swiss Re are using sustainability scores to price premiums. ESG criteria are now shaping risk appetite: sectors like coal, deforestation, and high-pollution industries are being excluded from coverage or charged higher premiums. This reflects a strategic shift where insurers act not just as risk carriers but as climate influencers.

India's Growing ESG Insurance Footprint

In India, ESG in insurance is still emerging but rapidly gaining traction. Regulatory nudges by SEBI on ESG disclosures and IRDAI's focus on long-term climate resilience are encouraging insurers to act. Public and private insurers alike are being nudged to embed ESG into their underwriting, investment strategies, and product design.