How ESG Data is Reshaping Insurance Underwriting

Environmental, Social, and Governance (ESG) considerations are no longer just a corporate buzzword—they’re now at the core of how insurers assess risk, drive profitability, and develop new products.
Once an afterthought, ESG data has become central to underwriting decisions, reshaping how insurers operate in an increasingly sustainability-focused market.
This shift comes as pressure mounts from stakeholders—investors, regulators, and customers alike—demanding greater accountability and transparency.
Insurers are responding by embedding ESG into their risk models, particularly in the Property and Casualty (P&C) sector. Here, ESG data helps evaluate the sustainability of properties and assess associated risks with greater precision.
Paul Richmond, Head of Customer Success at Novidea UK, highlights the role of the London market in supporting innovative, ESG-focused insurance products.
"The London market, renowned for covering all types of risks, plays a pivotal role in supporting innovative products that address ESG-related risks," he says.
Richmond believes that improving access to quality ESG data is essential. "To enhance its awareness of sustainability risks and their financial implications, particularly in the context of long-term models, it is essential to improve access to data and ensure it is easily consumable."
A PwC survey reinforces the growing influence of ESG, revealing that 85% of global insurers now recognise its impact on operations.
This influence stretches across investment decisions, risk management, internal audits and underwriting strategies—areas undergoing significant transformation as ESG becomes embedded into the insurance framework.
ESG’s Expanding Role in Cyber Underwriting
While ESG’s role in traditional insurance sectors is clear, its impact is also growing in less conventional areas like cyber underwriting. As businesses face rising digital threats, insurers are using ESG data to assess cyber risk exposure more effectively.
Melanie Hayes, COO and Co-Founder of KYND, explains how ESG is reshaping risk assessment in this rapidly evolving field.
"ESG data is increasingly shaping the future of insurance, especially in cyber underwriting, by redefining how insurers assess and price risks," she says.
Hayes points out that ESG insights go beyond traditional risk metrics. "Beyond traditional metrics, ESG insights illuminate systemic vulnerabilities—such as weak governance frameworks or unsustainable digital practices—that in today’s digital-first corporate environment elevate cyber risk exposure."
By incorporating ESG factors, insurers adopt a more comprehensive approach to cyber risk.
This involves evaluating governance structures, ethical digital practices, and even environmental sustainability, offering a more holistic view of potential exposures.
It’s not just about identifying technical weaknesses anymore; it’s about understanding the broader organisational context that contributes to cyber risk.
Challenges of Integrating ESG Data into Underwriting
Despite its potential, integrating ESG data into underwriting is not without its hurdles. A report from Capgemini reveals that fewer than half of P&C insurers have fully embedded ESG data into their processes.
The key challenges? Data fragmentation, inconsistent metrics, and outdated technology.
Hayes highlights one of the biggest obstacles: "The first and foremost challenge in integrating ESG data into cyber underwriting is the fragmentation and inconsistency of ESG data, which lacks standardised metrics, complicating meaningful comparisons across organisations."
This inconsistency makes it difficult for insurers to compare data across companies and industries, limiting the effectiveness of ESG-driven risk models.
On top of that, many insurers are still reliant on legacy systems that simply aren’t equipped to handle the complexity of ESG data.
Richmond underscores the problem with outdated infrastructure: "Without unified platforms, data risks remaining in silos, mirroring inefficient systems of offline spreadsheets and manually processed reinsurance schedules."
The solution lies in investment. To fully leverage ESG’s potential, insurers need to invest in modern technologies that enable seamless data integration.
This includes platforms that can consolidate data from diverse sources, apply advanced analytics and support dynamic risk modelling.
Only by overcoming these technical and structural barriers can insurers capitalise on the benefits of ESG in enhancing risk assessment and promoting long-term sustainability.
The Future of ESG in Insurance
Looking ahead, ESG data is set to become an integral part of underwriting strategies. Regulatory bodies are tightening ESG disclosure requirements, and investors are increasingly prioritising sustainable practices.
Insurers that fail to adapt risk falling behind in both market relevance and financial performance.
However, those that successfully integrate ESG insights will gain a competitive edge.
They’ll be better positioned to improve risk assessment, attract sustainability-focused investors and meet the evolving expectations of clients seeking future-proof solutions.
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