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We fully support Principles of Sustainable Insurance: SAIA

We fully support Principles of Sustainable Insurance: SAIA
09-07-21 / Staff Writer

We fully support Principles of Sustainable Insurance: SAIA

Johannesburg - The core business of the non-life insurance industry is understanding, managing, and carrying risk. By preventing, reducing, and sharing risks, the industry assists in protecting society, fostering innovation and under pinning economic development. These are key contributions to a well-functioning and sustainable society.

SAIA General Manager: Insurance Risks, Ms Pamela Ramagaga says sustainable insurance is a strategic approach where all activities in the insurance value chain, including interactions with stakeholders, are done in a responsible and forward-looking way by identifying, assessing, managing, and monitoring risks and opportunities associated with environmental, social and governance (ESG) issues. 

The global, long-term, and systemic risks posed by ESG factors can undermine the solvency of an insurance company and the long-term economic health of the insurance industry. These ESG factors include:

  • Environment: Climate change, biodiversity loss and ecosystem, water management (scarcity and quality), pollution.
  • Social: Financial inclusion, human rights, emerging manmade health risks. 
  • Governance: Regulation, disclosure, ethics and principles, alignment of interests.

Ramagaga points out that as supporters of the Principles for Sustainable Insurance (PSI), insurers join this global initiative to embrace fundamental aspirations and turn them into concrete actions. “These range from integrating ESG issues into a company’s management and operations, to working together with clients, suppliers, and governments to raise awareness of ESG issues, and developing new kinds of risk management products and services.

“The purpose of the PSI initiative is to better understand, prevent and reduce ESG risks, and better manage opportunities to provide quality, reliable and sustainable risk protection.”

The principles span the insurance industry value chain, from clients and suppliers, to intermediaries, insurers, and reinsurers; and promote constructive insurance industry collaboration with governments and regulators, business and industry, civil society, and academia, says Ramagaga, adding that these principles also assist insurers in aligning business strategies and operations with relevant frameworks that promote the adoption of sustainable business practices.

The four Principles for Sustainable Insurance are:

  1. We will embed in our decision-making environmental, social and governance issues relevant to our insurance business.
  2. We will work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions.
  3. We will work together with governments, regulators, and other key stakeholders to promote widespread action across society on environmental, social and governance issues, and health issues as displayed by the industry’s involvement in the financial sector worker-based programme currently being put in place by the Banking Association of South Africa (BASA) on behalf of the financial sector, at the request of the National Department of Health (NdoH)..
  4. We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the principles.

“The essence of the PSI is to create a common understanding that leads to collective and transformative action and long-term solutions. The scale of many sustainability risks is too big and complex for any one organisation to address. It is through working together and sharing ideas, best practices, expertise, and resources that a significant and lasting impact can be made. 

“The PSI are a foundation upon which the insurance industry and society as a whole can build a stronger relationship—one that puts sustainability at the heart of risk management in pursuit of a more forward-looking and better managed world.”

Ramagaga further explains that the PSI initiative is fully supported by the South African Insurance Association (SAIA), and the organisation will continue to promote and raise awareness among its members, to support the PSI and also inviting them to become signatories to the initiative. 

Benefits of signing the PSI includes:

  • Publicly demonstrating your organisation’s adoption of sustainable insurance aims and its accountability and transparency to the public in managing ESG issues.
  • Access to UNEP and UN system expertise and resources on ESG issues, policymaking, and science
  • Access to UN events to dialogue with governments and other stakeholders on ESG issues, risk management and insurance
  • Access to UNEP FI research, networks, events, and capacity building services spanning ESG issues, insurance, investment, and banking
  • Access to the Annual General Meeting of signatories

In closing, Ramagaga says SAIA members and their African counterparts in the non-life insurance and reinsurance space have a key role to play in promoting economic, social, and environmental sustainability. “It is in this spirit that on 21 April 2021, SAIA, under the auspices of the United Nations Environment Programme’s Principles for Sustainable Insurance Initiative, also signed the Nairobi Declaration committing to support the achievement of the UN Sustainable Development Goals (SDGs),” she concludes.

The Nairobi Declaration on Sustainable Insurance is a declaration of commitment by African insurance industry leaders to support the achievement of the UN Sustainable Development Goals. 

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