A systematic literature review on sustainability issues along the value chain in insurance companies and pension funds

Can the insurance sector truly embed sustainability across its value chain?

Laura Iveth Aburto Barrera and Joël Wagner study how insurance companies address sustainability in their paper "A systematic literature review on sustainability issues along the value chain in insurance companies and pension funds".

They screen 1,731 publications from the Web of Science database up to 2022, retain 51 academic studies, add 23 practitioner reports, and classify everything along a nine-category insurance value chain framework.

Their main conclusions include:

• Risk management and underwriting dominates academic attention with 27 publications, followed by investment management with 22, regulation with 20, sales with 3, and claims management with 2.
• Claims management, reporting, and client relationships receive substantial attention in the 23 practitioner studies from regulators, actuarial associations, and insurers.
• Climate change is the second most frequent research topic with 19 occurrences, and social and governance factors are never studied alone in academic work.
• The economic cost of weather damage could exceed $1 trillion in a single year by 2040, yet only a quarter of European climate-related losses were insured over the past 40 years.
• Most publications on social and governance factors appeared between 2017 and 2022, mirroring rising regulatory and societal pressure on the sector.
• Recurring obstacles include the absence of standardised quantitative indicators, unreliable hazard and exposure data, fragmented regulation, and the lack of concrete sustainability roadmaps.

This study suggests practices fall short of the ambition of the Principles for Sustainable Insurance because attention clusters only where climate risk is most visible.

Efforts concentrated in underwriting and investment leave claims handling, sales, and supplier relationships exposed and prevent insurers from adopting a systemic approach to sustainability.

It should be noted that developments since 2022 are not captured, so broader databases and updated screening would show whether claims management and sales remain as neglected as found here.