Project Development, Methodology, and Scoring Criteria

"Insurance regulators have an important role to ensure that critical sustainability risks and opportunities are effectively managed."¹

Dave Jones, Insurance Commissioner for the State of California

“Climate change is not a stand-alone risk and has to be embedded in the core prudential framework”²

Geoff Summerhayes, Board Member of the Australian Prudential Regulatory Authority (APRA)

Regulators around the world must understand the serious ESG challenges facing the insurance industry. More importantly, they must develop policies that will unleash the sector’s full potential in facilitating sustainability. As a result of increased awareness of climate change’s impact on the insurance industry, the Responsible Asset Allocator initiative (RAAI) at New America has launched a new project that aims to provide a global regulatory landscape to assess insurance supervisors’ progress on aligning the insurance sector with sustainable development goals. The project consists of two parts:

• The Global Insurance Regulators Sustainability Ranking: This ranking includes an assessment of 14 insurance regulators in major geographic regions. Metrics are based on performance or progress in incorporating ESG factors into sector supervision. Regulators are ranked on ten criteria designed to gauge progress towards sustainable insurance. The criteria are largely based on the UNEP Financial Initiative Principles for Sustainable Insurance (PSI) and important regulatory steps highlighted by the IAIS and industry experts. All information gathered for the ranking system has been based on publicly available information.
• Project report: This report presents key findings of the ranking project and provides recommendations for regulators on how to further incorporate ESG sustainability issues into risk management, governance and investment activities within the insurance industry.

Never before has an organization developed a ranking system for global regulators with the intent to encourage sustainability development and greater public transparency within the insurance sector. Sustainable insurance regulations continue to be refined, but we hope this effort encourages regulators worldwide to share and further develop best practices.

For the Ranking of Global Regulators on Sustainable Insurance, BWII identified 10 core practices that regulators should follow to integrate ESG considerations into insurance sector governance, such as the inclusion of climate risks into stress tests of the industry and policies encouraging investment in low-carbon economies. By gauging and scoring the performance of global insurance regulators against criteria like these, the ranking system can be a benchmark for regulators—helping them to formulate and implement policies that support sustainable insurance. The criteria are built on the UN’s Principles for Sustainable Insurance (PSI), which address practices including risk management, stakeholder engagement and investment management.