Progress is essential – but it’s rarely without consequence. As organisations push forward with sustainability goals, infrastructure upgrades, and long-term planning, it’s easy to focus on the visible wins: new systems, greener practices, and future-ready strategies. But beneath the surface, hidden exposures can quietly accumulate, posing risks to operations and resilience.
Understanding (unintended consequences) is critical to maintaining insurability and managing long-term risks for your business.
ESG: From compliance to consequence
Since ESG standards were first coined in the early 2000s, they have become embedded in mainstream business practices. However, as ESG gained prominence, some organisations adopted a superficial approach, focusing on box-ticking rather than meaningful impact. Not only has this led to increased scrutiny from regulators, investors, and the public, in some cases it has caused risk openings.
For insurers, this trend is translating into heightened exposure, especially for Directors & Officers, who hold greater responsibility for company actions than ever before.
Companies are increasingly facing litigation and regulatory action over ESG misstatements, greenwashing, or failure to meet stated commitments. In response, insurers are beginning to integrate ESG metrics into underwriting decisions. Coverage terms, premiums, and exclusions are increasingly linked to ESG performance and disclosures.
Sustainability: innovation meets uncertainty
A strategic imperative for many businesses, sustainability brings a host of operational risks.
Green technologies, renewable energy projects, and sustainable construction practices often rely on novel materials and methods. In efforts to stay ahead of the curve, these innovations, while promising, frequently lack long-term performance data, creating uncertainty for insurers. This can result in increased claims resulting from equipment failure, construction defects, or unforeseen environmental impact.
Uncertainty creates a grey area for insurers, who grapple to adequately provide cover for emerging technologies. Collaboration between insurers and insureds is key to navigating this evolving risk landscape.
Infrastructure: The Cost of Neglect
Aging infrastructure and chronic underinvestment in critical systems pose significant risks to insurers and society at large. Failures in these systems can lead to catastrophic losses, particularly in densely populated urban areas.
Insurers are increasingly exposed to claims arising from structural collapses, utility outages, and environmental contamination. These risks are compounded by climate change, population growth, and regulatory pressures.
Investing in infrastructure resilience and maintenance is a risk mitigation strategy that positively impacts your premiums going forward. Insurers are already differentiating coverage based on infrastructure quality and risk management practices.
Willis Temby specialises in recognising risk, navigating regulatory changes and managing claims effectively. To explore whether your current approach is the most effective for your business, get in touch with our team.