The notion that firms that adhere to ESG principles represent a better risk is one that has been gaining traction, and market recognition of this has been demonstrated by two announcements of the creation of dedicated capacity for strong-performing companies.
As this month began Beazley revealed it was creating an ESG consortium, with plans for a syndicate in a box (SIAB) to provide dedicated follow capacity.
And energy and climate risk finance company Parhelion revealed it had brought in TigerRisk Capital Markets & Advisory to work alongside Howden Capital Markets as it targets a capital raise of $500mn ahead of a 1 January 2022 underwriting launch.
Parhelion’s vision is to help clients start ‘greening’ their insurance spend by acting as a lead market on ESG products to allow other insurers to coalesce around.
Beazley’s planned launch will see it assess clients both through its own responsible business team and against external ESG metrics as it seeks to build out its portfolio.
Speaking to The Insurer, Will Roscoe, Beazley’s head of alternative portfolio underwriting, said the planned SIAB would be backed by both Beazley and third-party capital and would give investors “an opportunity to access responsible business and help their own ESG credentials”.
While capacity will initially be Beazley-led, Roscoe said over time he hoped to introduce additional co-leaders and follow capacity.
“We are looking in the first instance to prove that the model itself works,” he said.
Both the Parhelion and Beazley initiatives will be watched closely by the wider market. While both have hurdles to negotiate before launch, the announcements highlight the extent to which ESG considerations are rising up the underwriting agenda during 2021.