Bermuda-based specialty insurer Fidelis has appointed Victor Riega as its first head of sustainability. Mr Riega joined Fidelis from Standard Chartered where he was a senior sustainability manager. He had previously worked at Aviva, where he advised the insurer on its approach to human rights, its corporate responsibility governance framework and risk management.
Mr Riega said Fidelis’s strong commitment to ESG comes primarily from a conviction that it can do better as a business by incorporating ESG considerations into how it operates and does business – and not because of external pressure.
“ESG regulation, policies and voluntary standards have grown significantly in the past few years. Regulators are supporting this drive and including ESG in their plans. Ratings agencies have also played a role in making ESG more relevant by creating specialist ratings or incorporating ESG factors into their company assessments. All of this has an impact on insurers like Fidelis,” he said.
“However, for us they have not been a significant incentive to do better on ESG performance. This is because of our size (small), the types of business we write (non-consumer), the risks we pose to consumers and the financial system (low). All of which are factors that contribute to determine the level of ongoing regulatory oversight. Also, privately owned insurers tend not to be as much a priority as listed ones.”
Rigorous screening for ESG is sometimes perceived as a negative by insurers looking to grow their business, but Mr Riega doesn’t see it that way: “Including ESG considerations in assessing commercial opportunities is part of sound risk management. To use an analogy, it is not that ESG introduces a new puzzle for our underwriters and clients to solve. Instead, ESG is a piece of the puzzle that was previously missing.
“Considering this, we approach our clients with a partnership mindset. We want to learn from them and support them in their ESG journey. Taking a draconian approach in implementing ESG considerations rarely creates the right outcomes,” he added.
“Having said that, our partnership approach is not unconditional. We are prepared to walk away from a deal if necessary.”
Emphasising ESG, for example by promoting reduction of carbon emissions, fair labour practices or strong governance, is not only the right thing to do, Mr Riega believes. Including ESG considerations in day-to-day business opens the door to opportunities: “It can lead to innovative approaches, reduction of costs, protection of your brand, reduction of employee turnover, attracting talent etc. All of this can give you the edge in a highly competitive market.
“Also, in the past few years, we have seen an increase in the number of companies that are making ESG factors part of their commercial decision-making – for example, when deciding who to do business with,” he added.