P&C insurers are increasingly recognizing the importance of corporate sustainability and the role that environmental, social and governance (ESG) factors can play when identifying and managing risk to make more informed decisions. However, accessing ESG data on companies within their insurance portfolios can be challenging – especially data on private entities and small- and medium-sized enterprises (SMEs), for which reporting standards are less developed and the universe of data is limited.
To overcome this challenge, insurers need to first identify who they are doing business with through a matching exercise. Once they have comprehensively and accurately identified the private entities in their portfolios, then they can determine the coverage of ESG-related metrics, such as revenue and emissions, which are required for Partnership for Carbon Accounting Financials (PCAF) reporting across their portfolio.
Sourcing data on SMEs can be even more challenging than on larger private entities. Smaller companies are subject to fewer disclosure requirements than their larger or listed counterparts. To bridge this data gap, insurers can take advantage of Moody’s modeled ESG scores, which are underpinned by data on public and private companies of a similar size, industry, and location to generate a predicted score. These scores help insurers integrate ESG considerations into their workflow to help make informed decisions. For example, insurers can use modeled ESG scores to reduce risk exposure, improve underwriting decisions or attract ESG-conscious customers.
Also helping to solve this challenge is the breadth of our global entity data. Our award-winning Orbis database contains information on over 462 million entities worldwide, with ESG predicted scores and carbon emissions data on 338 million companies. By using this vast amount of data, insurers can gain a holistic view of their portfolio and the types of organizations with which they are doing business.
Figure 1: Orbis is the resource for global mastered entity data
Figure 2: Our global entity coverage
To learn more about our ESG Insurance Underwriting Solution, click here.
