Before the African insurance industry can attain sustainable growth across the continent, there is a need for regulators and underwriting companies to adopt Environmental, Social, Governance (ESG) framework to drive viable market expansion.
ESG is a strategic framework for identifying, assessing, and addressing organisational objectives and activities ranging from the company’s carbon footprint and commitment to sustainability, to its workplace culture and commitment to diversity and inclusion.
The call was made by the Chief Executive Officer of the ICEA LION Holdings, Philip Lopokoiyit, at the 2022 Insurance Directors’ Conference held at the College of Insurance and Financial Management (CIFM) in Lagos, with the theme: Transforming the Insurance Industry through ESG Principles: Directors’ Roles.
Lopokoiyit said the key substance of the Nairobi Declaration on Sustainable Insurance was a declaration of commitment by African insurance industry leaders to support the achievement of the UN Sustainable Development Goals (SDGs).
He stressed that the declaration is “an Africa-focused initiative designed to encourage and support African insurance market players.”
He added that “It is a convening tool that signals their willingness to develop ESG principles and solutions within their businesses as insurance players become change agents in light of the biggest challenge facing humanity.”
The ICEA LION Group executive said the declaration is important because while the UN Sustainable Development Goals (SDGs) are gaining momentum, progress to meet these SDGs from a financial services perspective was not yet at the speed or scale required.
According to the ICEA LION Holdings CEO, the signatories made a commitment to insure cumulatively more than 1.4billion people by 2030 as well as provide $14 billion insurance capacity for flood, drought & cyclones in Africa.
He described the $900 million multi-donor-trust fund facility, which when fully set up and resources mobilized, will be available for NDSI signatories.
The facility will drive premium subsidies, product development and capacity building. According to the executive, other significant milestones for the continent at COP 27 included the launch of the Africa Carbon Markets Initiative as well as the decision by developed countries to establish a loss and damage fund.
In terms of challenges of enthroning the ESG model in Africa, Philip identified six major roadblocks as heavy carbon-driven economies, few African voices on the issue, considerable lack of knowledge & awareness, uneven playing field for early-adopters of ESG, short-term planning models and lack of green finance instruments to quickly facilitate adoption of ESG principles.