In­sur­ers as­sume so­cial risks


Risk management

In line with its importance to the economy as a whole, the insurance sector plays an important role in promoting economic, social and environmental sustainability. 

First and foremost, the insurance industry underwrites risks, allowing it to cushion the financial blow of loss events. The protection of private and corporate clients against risks that could pose a threat to their livelihood is the core mission of the Swiss insurance industry. This makes it an important partner for its private and corporate clients. It offers protection against climate risks – for example, in the event of floods or droughts. And individual insurers enter into business relationships with companies with business activities that may be controversial in some parts of society. 

Traditionally, insurers have also helped their clients to avoid risk. In the interest of both partners, insurers help their customers to better protect themselves against potential loss events. 

Insurance companies also rank among the economy’s biggest investors. In this role, they contribute to making financial flows more sustainable. 

Thus, insurance companies play an important role in the resolution of sustainability problems. Within this context, moves by insurance companies to expand their risk management systems are of central importance in ensuring that sustainability issues are handled appropriately. Climate change and other sustainability risks can lead to considerable social and economic damage. The importance of responsible behaviour by the corporate sector towards society has shifted significantly in recent years. Nowadays, companies are expected to take responsibility for the unintended negative implications of their business activities. 

This results in two types of sustainability risk for both insurance companies and companies from other sectors: first, the risks resulting from the sustainability problems for the insurance industry itself. The focus here is on claims payments, but increasingly also on investment, reputational and liability risk. Second, the risks that arise for parties affected by sustainability effects. These are risks resulting from sustainability problems, such as changes in climatic conditions or environmental pollution. 

Regulatory developments

The regulatory developments in sustainability risk management place new demands on risk management at insurance companies: 

  • In June 2020, the Swiss federal government adopted guidelines on sustainability in the financial sector. The aim is to make Switzerland a leading centre for sustainable financial services. In order to achieve this, the Federal Council aims to create overall conditions that will improve Switzerland’s competitive standing as a financial centre and allow the financial sector to make an effective contribution to sustainability. The SIA welcomes these guidelines, which are based on the principles of a market economy.
  • In November 2020, Finma unveiled proposals on how the disclosure regulations for larger insurance companies and banks can be expanded in order to take climate risk increasingly into account. This measure allows an easier comparison of companies and aims to ensure that they deal appropriately with these risks.
  • In December 2020, as part of its strategy to strengthen Switzerland’s status as a sustainable financial location, the Federal Council recommended that companies publish reports in line with the recommendations of the Task Force on Climate-related Disclosures (TCFD). The Federal Council has also asked financial institutions to publish information on how they take climate and environmental risks into account in asset management as part of their legal loyalty and due diligence obligations. In addition, the Federal Council has asked the responsible authorities to develop a legal basis for the binding implementation of the TCFD by companies in all sectors. This is a measure that the SIA welcomes. Such information is essential in order to allow the financial sector to assess market risk and investment opportunities overall. 


Over the last few decades, sustainability risks viewed from the perspective of the financial industry have related primarily to reputational risk. The primarily objective was to avoid criticism for doing business with or investing in controversial sectors. More recently, players such as the OECD and individual national regulators have set out further details on what they expect in terms of environmental and human rights due diligence. Today, sustainability issues increasingly pose financial risks (cf. 4.1). These increased transparency requirements also go hand-in-hand with more intensive cooperation between the individual Swiss insurance companies. This has taken place within the SIA, the working groups of the industry association Swiss Sustainable Finance and the networks of the UNEP Finance Initiative. Several Swiss insurers are already signatories to the Principles for Sustainable Insurance (PSI) and the Principles for Responsible Investment (PRI). 

Although the insurance industry has so far focused heavily on sustainability risk in the investment business, attention is increasingly shifting to actual insurance business – underwriting. This is an area in which relationships with clients and accordingly the solutions are more complex. As a result, companies must adopt a clear stance, expand their risk frameworks systematically and ensure consistent implementation in daily business. Thus, insurance companies first assess the relevance of the various sustainability risks. A subsequent prioritisation allows the introduction of testing and decision-making processes for individual business areas.