Captives will help fund ESG efforts: Panelists – Enterprise Insurance
Captive insurers can play a potential role in helping their organizations support and fund aspects of environmental, social and governance projects that bring long-term value, experts said Friday.
As companies strive to build a more sustainable carbon footprint, the ability to use the surpluses generated by their prisoners to fund environmental projects could add value, according to participants in an online session at Risk & Insurance's 2021 Enterprise Risk Management Management Society Inc. Conference.
Karen Hsi, program manager, captive insurance programs for the office of the President of the University of California, said the savings made by captive self-insurance for risk could be used to implement future projects that will reduce the company's carbon footprint like adding solar panels on campus.
A characteristic of proprietary insurers is the ability to invest any money held in surpluses and reserves and return them to the parent company to fund the business.
“There is longer term value in using ESG as a broader risk management tool, not just an investment component,” said Ms. Hsi.
Anne Marie Towle, global captive solutions leader for Hylant Inc., based in Indianapolis, said captive surpluses can be used in a number of ways when it comes to managing risk and supporting broader ESG initiatives.
For example, during the pandemic, many companies used their self-consumption surpluses to buy personal protective equipment for their employees or to support COVID-19 testing, Ms. Towle said.
“It's not just about responding to claims and paying them, it prevents any kind of claim, be it health insurance, dormitory or medicine. It's the whole gamut, ”she said.
Some companies have sponsored a tutor or provided mental health resources online, said Tanja Maffei Chan, senior vice president, global risk management leader at Hylant.
"All of these things came out of the pandemic, and some of them were funded by their own surplus," Ms. Chan said. Waste management and recycling is another ESG focus that could be supported by an organization's captives, she said.
Being ESG aware and having strong governance as part of overall risk management also helps in a company's insurance and reinsurance renewal, the panellists said.
“We all know that we are in a tough market. The pandemic only made it more difficult, ”Ms. Hsi said. While a captive can help a company take advantage of their renewal pricing and rewards, “ESG can further support this as your captive is at the forefront of best practices, is environmentally conscious, socially conscious, and has governance,” she said.
Captives were born of innovation and can help companies think differently about risk and create value, said Ms. Towle.