Integrating ESG into Underwriting
Underwriting excellence is a key pillar of our business strategy. This empowers our underwriters to decrease volatility and improve performance by enhancing risk selection, applying underwriting best practices and building robust monitoring standards. A key aspect of underwriting excellence includes integrating ESG considerations into our underwriting practices to inform decision-making and help ensure our underwriting is aligned with our other ESG efforts.
We have developed an ESG underwriting framework for General Insurance and are in the process of implementing it across the organization. The framework defines our company-wide approach for consistently integrating ESG across all product lines and is based on four key elements:
AIG Enterprise Risk Management (ERM) has developed proprietary industry-level ESG risk ratings for the Standard Industrial Classification (SIC) codes to provide a holistic view of risk that transverses all types of insurance business written and assets held by AIG.
These industries are scored based on an evaluation of ESG performance, trend analysis and ESG reputation of each industry.
These ratings are then used as an input in the ESG underwriting framework screening process and are also an important input to climate risk plans, as they aid in the application of disciplined risk parameters, identify high-risk lines of business, support responding to regulatory requirements, guide stress testing and provide a link between liabilities and investments.