There’s a gripping moment in Shakespeare’s “Othello” when Cassio, hoodwinked by Iago into losing Othello’s trust, repeats, “Reputation, reputation, reputation! O, I have lost my reputation! I have lost the immortal part of myself.”

Executive Summary

At some point, ESG factors may make some companies uninsurable, an executive of Zurich Insurance told Journalist Russ Banham late last year. Zurich and Allianz are among the European insurers that are trying to influence customers to transition to a low-carbon society. Here, they explain their positions and processes they're using to assess current and prospective clients.

Once lost, reputation is rarely restored. And that is proving a problem for insurance companies and reinsurers that carry the risks of other businesses on their balance sheets. A reputation that is soiled by environmental issues, #MeToo allegations or executive embezzlement charges can trigger regulatory and legal actions, consumer boycotts, and a fast retreat by investors, producing potentially severe insurance losses for carriers.

That’s just one problem for the industry. Another is the impact on insurers’ and reinsurers’ reputations for insuring or investing in companies whose ESG (environmental, social and governance) considerations are questionable to subpar. A special report by ratings agency AM Best in mid-November 2020 emphasized that insurers and reinsurers that ignore ESG in their underwriting and investment decisions confront serious reputational risks. In turn, this risk can cause buyers and investors to flee to competitors, affecting the companies’ creditworthiness and ratings.

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