Study reveals APAC insurers lack net-zero integrations

Majority of insurance firms have incorporated ESG into their investment decisions but only half have net-zero integrations.

Half of insurance companies in Asia Pacific have not yet started integrating net-zero considerations into their investment strategies, according to a joint survey by global asset manager abrdn and consultancy firm Quinlan & Associates.

The April study revealed nearly three-quarters of the senior executives surveyed across 43 insurers in the region admitted that regulatory compliance is among their top motivations in integrating ESG into their investment decisions, though branding and reputation also play an important role.

About 70% of the APAC insurers have either already integrated or are in the process of incorporating ESG into their investment strategies, leaving the remaining 30% firms that have not yet even started.

In their net-zero journey, the study showed a larger share of 50% have no net-zero integration at all while the other half are either in progress or have already net-zero integrations.

Poor data quality emerged as the largest barrier among APAC insurers in their ESG integration journeys.

The survey also revealed how companies are facing challenges in converting ESG considerations into clear investment strategies.

“We see regulatory adoption and ESG integration as high priority focus areas for regional insurers amid the current market conditions,” said Xiong Jian, senior insurance solutions director at abrdn.

“The key to gaining a competitive advantage for regional insurers would be to move away from a reactive, compliance-driven mindset to a proactive one, leveraging RBC, IFRS 9 / 17, and ESG as strategic differentiation points,” Jian added.

In the next three years, 62% of the insurers expect local authorities will tighten their ESG regulations especially in Australia, Malaysia and Hong Kong.

The survey polled 56 senior executives across 43 insurance companies in Hong Kong, Singapore, Australia, South Korea, Thailand, Malaysia, Taiwan, and Mainland China.