How Kenyan insurers can latch onto ESGs for sustainable growth

Africa’s first-ever woman Nobel Laureate Wangari Maathai’s last words to Kenyans inspired by the hummingbird parable sums it all up. What we can do in our different capacities to green the world, save the environment, and improve livelihoods.

“We should always be like a hummingbird. I may be insignificant, but I certainly don’t want to be like the animals watching the planet go down the drain. I will be a hummingbird, I will do the best I can,” she said.

As our planet faces unprecedented adverse climatic changes, ecological degradation, and dwindling natural resources, it is evident that we are facing a crisis that calls for decisive interventions starting at the individual level.

Climate-related catastrophes witnessed lately from droughts, floods, heat waves and rising sea levels mean there is an increased level of risk, hence the need for better and data-informed response.

Embracing Environmental, Sustainable and Governance (ESG) principles is not only vital for building a sustainable and resilient future for the nation but also presents a strategic opportunity for underwriters to position themselves as socially responsible leaders.

A worldwide survey by PWC has it that 76 percent of consumers will discontinue their relationship with companies that treat the environment, employees or community in which they operate poorly‘.

By leveraging technology and data analytics, insurers can develop innovative solutions that address emerging risks and promote resilience in the face of environmental and social disruptions.

Incorporating ESG factors into risk assessments will enable insurers to better understand and manage the financial implications of climate-related claims.

Moreover, insurers can incentivize policyholders to adopt sustainable practices by offering tailored products that reward eco-friendly behaviours.

To promote social inclusion through ESG-driven practices, underwriters should develop solutions that cater to the needs of underserved communities.

Products such as microinsurance for low-income populations play a significant role in expanding access to financial protection.

Furthermore, integrating social factors into underwriting policies can ensure fair and equitable treatment for all policyholders, fostering a more inclusive insurance ecosystem.

ESG-aligned corporate governance is critical for building trust and accountability within the insurance industry. Sound governance practices ensure ethical decision-making, transparent operations, and responsible risk management.

By adhering to these principles, insurance companies can build stronger relationships with their customers, regulators, and other stakeholders.

Additionally, good governance practices inspire investor confidence and attract responsible investments, enabling insurers to access capital for sustainable business growth.

While integrating ESG considerations presents numerous opportunities for Kenya's insurance industry, the sector is yet to fully embrace these principles and frameworks which are still in the early stages of adoption across the market.

The writer is the group chief executive officer at CIC Group.