15 mins read

Implementing ESG in the Insurance and Underwriting Space

by Juan de Castro, COO, Cytora

This a shortened version of Making Risk Flow podcast, episode: “Implementing ESG in the Insurance and Underwriting Space”. In this episode, Juan discusses implementing ESG with Simon Tighe, Group Head of Investments, Treasury and Credit Risk at Chaucer Group, and Paul McCarney, Senior Director of Insurance Product Strategy at Moody’s. Together, the trio talk through the relevance of ESG data in insurance, the need for standardised data, and how the industry can unite to create a more sustainable future.

Listen to the full episode here

Juan de Castro: Hello. My name is Juan de Castro, and you’re listening to Making Risk Flow. Every episode, I sit down with my industry leading guests to demystify digital risk flows, share practical knowledge, and help you use them to unlock scalability in commercial insurance.

So welcome everybody to this new episode of Making Risk Flow. In past episodes, we talked about what it takes to deploy end-to-end digital flows in commercial insurance. And one of the questions that comes up quite often is, okay, how do you start using new types of data to look at new angles of the risk that historically have not been looked at? And this brings questions around what data to use, how to use it, or how should it impact underwriting decisions? So today we’re going to deep dive into probably what’s the best example of a new type of data, which is ESG, right? So environmental, social, and governance data. ESG measures the business’s impact on society, the environment, and how transparent and accountable the businesses are. And it’s a great example of a set of non-traditional client factors that have historically been overlooked by insurers and underwriters as part of their risk analysis process. I think the good news is that the ESG is now in the boardroom agenda in most of the insurers, and every insurer is now thinking about how they incorporate these elements into their underwriting decision process. So today I’m joined by two of the main ESG thought leaders in insurance. So Simon Tighe, who’s the group head of investments at Chaucer and Chaucer, is probably pioneering the use of ESG data in underwriting. And Simon is leading this initiative. And Paul McCarney, who’s a senior director at Moody’s. Moody is a global leader in financial data and also spearheading the standardization of ESG data in underwriting. So, Paul and Simon, thank you so much for joining me today. Let’s start with a brief introduction of your roles and background. So perhaps, Simon, do you want to start?

Simon Tighe: Sure. I just want to say thanks for having me, Juan. My background is I’ve got over 15 years experience within the insurance market, mostly in the finance part of that. So I run the investment team at Chaucer and the Treasury and Credit Risk, where we oversee the risk of our asset side of the balance sheet, basically. So I’ve been at Chaucer now for six years. But really, when it comes to this topic, my role in this is I’m part of the ESG Steerco at Chaucer, which is chaired by our CEO, John Fowle, and we came up with this idea of a balanced scorecard within that SteerCo and I’m the one that is really pushing it forward with the support of the Chaucer team and the Moody’s team. So really, I’ve been fortunate to kind of be the face of it, but I’m not taking the credit for it. There’s a lot of people at Chaucer who have had a lot of key roles to play in this.

Juan de Castro: Thank you, Simon. Paul, do you want to do the same?

Paul McCarney: Yeah, I can go next. In terms of my background, I lead the product strategy efforts within Moody’s to develop our ESG underwriting solution for insurers. And I guess with Simon, I’ve kind of really been involved since day one in the original idea that Chaucer had, which I think fitted really well into what Moody’s is doing more widely, which is really trying to develop. Out an integrated risk assessment framework for insurers and other participants in the financial markets to kind of manage the growing number of risks that they face. I guess ESG has been a key one that we’ve focused on. And I guess Moody’s is really bringing together the group that’s developing that capability, both in terms of the data, the methodology, but also the workflows to make sure we get the data and if you like, the analytics into the hands of the right people to kind of start making decisions.

Juan de Castro: Thank you. Definitely two key people to talk to about ESG. So really excited about the episode. Simon. Let’s start almost with the basics, like what is ESG and what is the objective of using ESG data and underwriting?

Simon Tighe: So that’s a really pertinent question because ESG means many different things to nearly everyone. So the way we have to find it is the use of environmental, social, and corporate governance factors into our decision making process. So that is really assessing the counter parties’ impact on data points within each of those elements of ESG and how they are positively or even negatively contributing to them. So for us, really, it’s about impacting our decision making, but doing it in a balanced way is the way we would view it. When it comes to the underwriting process, we don’t limit our view of ESG to just the underwriting. We acknowledge that incorporating it into underwriting is a big challenge for our sector because that is just what we do. We have actually embedded our ESG process across underwriting investments and our full operations as well. And we want the same data set to go across all of those counterparties. The objective of what we’re trying to do is straight up is to just to understand our counter parties better and to just play a role in the whole transition. We all agree right now the world is at a pivotal point when it comes to climate change. Climate change is a very important factor of ESG. It’s not the only factor of it, but it is the most pertinent kind of issue that we are all facing. So we are just looking to aid in that transition, but also acknowledge how much for role that we can play. We want to be honest about it, we want to be authentic about it. Chaucer is a top player in the Lloyd’s market. We are a large insurance company, but we’re not the largest. And the insurance insurance market as a whole has got a massive role to play and we all need to come together to do it. So it’s not just the Chaucer specific thing. We think it’s an insurance industry piece that we all need to come together to drive that transition. And that’s how we can positively impact on this is we can talk about restrictions, we can talk about removing ourselves from certain parts of business and certain types of risks, but really we want to see positive movement into a more sustainable future.

Juan de Castro: That is a fantastic overview. And you touched on one topic that I’m sure we’ll discuss later, which is, as I said earlier, you’ve been spearheading this initiative probably within the London market, but it needs to be a market wide effort. Right? And unless that happens, what is the point? And there are many challenges around that I’m sure we’ll touch on in a few minutes.

Simon Tighe: Yeah, I’m quite sure about touching it, but it’s absolutely crucial that we land on a market standard and we go in one direction together, because if we don’t do that, we end up putting the burden on to our brokers and onto our clients. And it becomes a disjointed effort that we just need to avoid, because in its essence, for ESG, it’s there to make the world a better place. And if we’re all going in different directions, that’s going to be much harder to achieve.

Juan de Castro: Definitely. And perhaps a quick question for you, Paul, because Simon has been talking about different facets of ESG and the need for standardization of data. So can you give us kind of your perspective of what types of data are involved in ESG considerations?

Paul McCarney: Yeah, also just kind of interestingly, taking a slight step back, 18 months ago, I would say within the market itself, ESG, there were some considerations around ESG, different companies, maybe. I wouldn’t say it was top of the agenda. There’s one thing we’re seeing, and I think it’s pretty incredible in the space of 18 months, not only is it top of the agenda, but to the point Simon raised there, but the market standard. We’re certainly seeing a growing demand from market participants saying we want to get together and try and figure out a way of standardizing how we think about this. Which I guess to your point, then, why are you thinking about the data? So you’ve obviously got this idea of an overall score or assessment of a company’s environmental, social and governance there’s probably when you break it down into what are the criteria or the risk criteria that may cut each of these ESGs and then subsequently the underlying questions that you would ask a client. There’s an element of this which is trying to understand, given the products and services that companies do, trying to understand how they impact both in terms of potential financial impact on the companies given ESG risk, but also what’s the impact or contribution they make to the wider society. So those are things they do that have a positive or negative impact outward looking as well as then potential risk to the company from our perspective. And I think this is where with Chaucer and the work that Simon led, I think it really galvanized us is we have a framework that we developed over the years, I think in the region of about 275 data points that we use to assess companies. Obviously it depends on the sector, the industry, which of these data points are relevant. But what was really interesting, I think the work that Simon had done is really trying to think through from a liability perspective on an underwriter perspective, where I guess in this sense you’re entering into a contract with the client. You can’t necessarily opt out of this if there’s things you don’t like compared to an asset owner who maybe thinks of ESG risk where there isn’t a short term impact, at least at the moment. So what was really interesting for us is how we can start to think about evolving some of our questions and criteria with the work that Chaucer has done to make it more specific to how insurers think about the risk as a liability owner. So I think in that sense, that’s work that I think we’ve done together, and I think what will be interesting then is trying to see if we can get a wider group within the market that would sort of arrive a common definition of what these questions should be, at least just now, given some industries, some markets haven’t really started to measure and disclose things like the transition plan, things like their emissions from a carbon perspective. So I think hopefully in the coming months you’re going to see quite a bit of development there, I think within the market as it starts to think through what would be potentially common agreement of how you think about this, to make sure you are measuring the ESG risk, if you like. So you’d be interested to see how that develops.

Juan de Castro: Definitely. And Paul, you mentioned 275 data points. Obviously there’s a risk almost of data overload of like how do you manage such a large number of data points and wealth of data around ESG? And I think, Simon, you mentioned that one of the things you’ve done is build an ESG scorecard. I would imagine it tries to combine all those data points is something that is usable by humans. So can you give us an overview of what the scorecard is and how you came up with the scorecard.

Simon Tighe: I’d be delighted to. So I think what Paul said there was really interesting because of the whole liability side of the balance sheet. So insurers are quite unique. We’ve got the asset side, we’ve also got the liability side. It’s probably one of the few industries where we have significant exposure on both and we have to manage the ESG risk across that. When you went I started working on ESG when I took on the investment role back in 2018. We were looking at the traditional metrics out there and we started to assess our portfolio on them. You’d be looking at GHG, you’d be looking at board diversity, stuff like that. There was probably between 10 and 15 different metrics, and that was fine for the asset side, and it was a growing area of asset management. But when you looked at the underwriting side of it, it didn’t feel appropriate. It just didn’t feel right. Because when you look at the asset side, you’re looking at the financial risk of what you’re doing. Right. What’s the chances of us losing our capital that we’ve put into this? When you look at the underwriting side, what it is you’re looking at is like the risk that you’re taking on from this company. And are they a well managed company? Yes, there’s a financial risk there because you can have losses, but you’re essentially paying your premium up front or installments. The actual cash flow issue isn’t the point, it’s how well is this company managed and what is the likelihood that they’re still going to be around in 10 to 15 years right? That’s a key question that we want to get to. So when we looked at it, we kind of looked out in the market. We’re like, well, what’s out there that’s good for ESG? And, you know, there was a great piece of work done as part of the UN PSI work where they worked with Allianz and they did a great piece of work there where they kind of laid out risk criteria on that. And we use that as a reference point. So we used my investment work, then we overlaid that with the UN PSI work that was done. And then we worked with our underwriters and said, right here is the starting point. What more do you need? If you had a blank piece of paper and you could define ESG and how to assess ESG for an underwriter, what data points do you want to see? What are the risk criteria? And we went through many hours of meetings and discussions about this, and we said, in a row, you’ve got free will. You can go and say anything you want. And they listed out 240, 250 different data points. We bucketed them up into over 50 risk criteria. And then the next challenge from that was, right, this is what our underwriters say we need. Who can actually give this to us, right, that’s the next challenge, is who out in the market has this data on the sort of clients that we have? So as a specialty market player, we have over 30,000 insureds. We see over 100,000 submissions every year. That’s a mixture of public and also private companies. So the level of data out there is very, very different for each one of them. And when we looked at the market, Moody’s really stood out because they have all of this information in there. They have done lots of acquisitions during the year, and Bureau van Dijk was one of them, and they have over 400 million companies in that database. And then they also had the work that they were doing on ESG, and they’ve invested heavily on that. And it just became very obvious that they were the right company to work with. They also allowed us to have our own view. It was very important. And we were very clear with Moody’s, and we really appreciated how flexible they were when we said, we want our own view of risk. We don’t want your rating. We don’t want Moody’s to tell us what the view of this risk is. As an insurer, that’s our job. We’re here to understand that risk. We want our own view of that risk. It’s very important that we’re able to do that. So they agreed to that. They put in an absolutely wonderful team to work with us, and they worked with our underwriters and ourselves to kind of go through the data points we had, because it was also very important to us that we challenged those data points. It’s all well and good saying that we want all these data points, but are they even relevant? Are you even able to get them? And that was a great session with the Moody’s team, where they really challenged our data points and really challenged the risk criteria, and they suggested some changes. We also challenged Moody’s on some of their data points. And we came to this point where, for underwriting, we feel we have a great starting point where we got the over 50 risk criteria down to 44 risk criteria. We got the over 200 data points down to 158. We feel like we’re in a place where that’s good enough to be out in the market. We’re not saying it’s done. We’re not saying that this is everything an insurer needs, because what we want now to happen is for the insurance market to come in and say, actually, we think we want this. We want this. We want it to be a market kind of standard. We don’t want it to be a Chaucer product, because it’s not. This is our attempt to build something, to start a conversation for us all to come together and coalesce around one framework and to agree on the data points that we need to actually get. And one of the core objectives is to remove burden from our clients and brokers. The last thing they need is every insurer in the market, giving them a different questionnaire with different data points, looking for that information to be posted to a different place. So really that was the genesis and how we came to it.

Paul McCarney: I agree with Simon there. I think the constructive engagement we had and again, I think both sides put in a tremendous amount of effort over the course here, really to kind of really peeling it back and challenging. Is this the right question? Why, and also why not from a theoretical perspective, but also practically, do we think industries will be able to answer these questions? I think that was certainly from a Moody’s perspective. We have a lot of data sitting on the shelf as such, but we really had to kind of there was a lot of work we had to do to get this in a way that we could actually kind of help you. And I think that was a really good journey for us to go on to make sure we actually understand how to deliver. But I think also the thing that really I think stands out for insurance compared to other participants here is this idea of their own view of risk as well. I think a lot of underwriters, that’s the kind of common philosophy, how they think of some of the other perils. But once you’ve got that data, how do you want to think about what material to you, what’s essentially almost a secret sauce? I think that is something that’s a pioneer to you. And I think my experience with the rest of the market is certainly one of the key aspects to this, is really kind of galvanizing the interest in the market that you can actually own this to some extent. It’s not just buying a rating, using it to tick a box. It’s really kind of by being able to impose your own view on this, you really have to understand the data and subsequently understand the risk that you’re taking on here in terms of how they operate, what their impact is on the environment and people on the planet. I think that’s something that will be really interesting, how this moves forward in terms of the development.

Juan de Castro: Plenty to unpack there. But let me first start with just one question, which is how underwriters are using that today just to bring it to life. Is it something that they are using that score guard to understand individual risks or talk a bit more about that perhaps, Simon?

Simon Tighe: So to be fully transparent on it, we’ve broken it down to a post bind and a pre bind kind of view, right. So on the post bind, it’s really just looking at what’s already been done and assessing our book and that’s what 2022 has been all about. The prebind really kicks in when it comes to kind of age two of 2023, which is when underwriters will start using this in earnest and they’ll be using it to understand the client better. So to be both the answer, they’re just not using it yet. So it’s just not part of the decision making process. But it will be, and it won’t be the driver of the decision. I think this is a really important point. I think it’s something that we get bogged down in within the market. We feel like we have to make decisions purely based on ESG sometimes. And ESG is a data point that should inform our decision. But there are many factors that should inform that decision. And we feel that we have to engage with our clients, because there’s no point in us divesting. We have to engage. So we’ve got a framework where we want to aid the entire transition across the board. We want to give, it’s called the balanced scorecard for reasons, we want to give enough weight to E criteria, S criteria, and G criteria. We accept there are certain elements of that that we would have to prioritize. We all know we have to fix climate change. We all know we have to do something there and that will be a priority for us. But I think for us it’s a balanced view across that and we want to make sure that, yes, we’re doing that, but we’re not going to be negatively impacting on the social enterprises of other regions by doing that. So we want to help people progress on the transition so that’s how they will use it. So when we get to the point in July, August time, when it is ready to be used for the pre bind, underwriters will be using it to understand the new information about their clients. So we’re building a tool with Moody’s right now where they’ll have access to an app, where they can log in, search the company in a very nice, easy, accessible dashboard. They’ll see certain aspects about that client and they’ll be able to understand the ESG footprint of that client upfront. Now, they can use that to inform their decision. They can use that to say, this is the starting point, which is what we want them to do, and we want to see a positive trend for each renewal from then on, basically.

Paul McCarney: In addition to that, I think the thing we see has been a key feature to this then is also the title of a Marginal Impact. So obviously, Simon says you’ve got an understanding of the post bind portfolio in terms of the exposures. So that gives you a kind of reference point, if you like, what’s our ESG exposure at the moment across different lines of business locations and sectors. But then hopefully then from that perspective, the underwriter can start to say, if I was to add this account down, what is it to do to the portfolio? Does it go up or down. And I guess you can think of this at the top level, the overall score, but I think my gut feeling is I think the underwriters will get real value when they start to think of this really at the criteria level because those are the kind of risk level. But I think it’s kind of more maybe tangible in terms of giving that company what they do, what we’re ensuring as such in terms of either the activity of the project, it’s starting to really help them understand what that means. It’s not, as Simon says, making a decision purely based on ESG, but it’s hopefully then informing them as to what this impact should do. And then I think longer term that will only build itself out as the analytics get more refined. I think safe to say, the way the Simon is referred to is, it’s what we’re seeing withthe rest of the market as well. It’s starting at that top portfolio level view of the postbind and then walking down so the underwriters can have a reference point as to what this all means.

Simon Tighe: If I could just get some color there on how Chaucer got to this point, because there was a turning point for Chaucer back in 2020 that really turned the view of our board on this. We had a gentleman come in called John Goldstein from Goldman Sachs and he ran an ethical investment company that Goldman Sachs bought. And he came in, he explained, don’t think of ESG as a burden to you, think of ESG as a way to identify clients that would be here in five and ten years time. Think of it as it’s that data point. Who are your sustainable clients? People that are making the marginal gains and showing a positive trend are likely to be your sticking your clients into the future. So who’s going to be here in 10, 15 years time, basically. And that really kind of changed the whole mindset for Chaucer.

Juan de Castro: That is really clear from talking to you which is often people think about ESG compliance and regulatory thing, but really it’s about the culture of the client, right? And that is at the core of underwriting. Right? I mean, if you want to, if you want to understand the liability, specifically the liability risk of a given client is all about what’s the culture. Exactly. There have been in the past some efforts around using Google reviews to understand the culture of the company, right? Is this a well managed company conscious of the world around them? And as you said, is this company going to be alive in 5, 10 years? And I think that change of mindset is when you understand like how core to the underwriting decisions it should be.

Simon Tighe: That’s it. I think you’ve nailed it there. One like it is the culture of the company. If the company is actively engaging, we’re not saying you’re going to be perfect, right? We’re being authentic to ourselves. We’re saying this is where Chaucer is, we’re on a journey as well as you are. We’re not trying to say you should be better than us. We’re just trying to say we want to transition, we want to become more sustainable, and we want you to come with us. Right? And that is the point. And if you have a culture where your management team and the people that work there are actively trying to achieve that, then the theory is you’re going to be a better company to insure.

Juan de Castro: Definitely. And the other thing to unpack into, I mean, both of you have mentioned a few times the need for standardization. And what I want to deep dive into more into that, because if I was playing devil’s advocate is why? Why do we need standardization? Right?

Simon Tighe: Well, I mean, there’s many examples out there where standardization hasn’t happened and where it’s really difficult. I liken it back to the KYC process that we have to go through on the financial services side. Everyone’s got a different approach to KYC and it is a real burden. And ESG now is becoming very similar to that, where you’re getting multiple questionnaires out there. The amount of burden is putting on people to have to answer questionnaires in different forums with different data points. It’s just turning people off, wanting to deal with it. Right? So even for the non insurance market, for our clients, if we standardize it, that’s a way for us to help them to engage in it. It’s a way the insurance industry can actually educate some clients that don’t have the resources that we have. They don’t have the access to information we have, and we can educate them and they can actually engage with ESG and start on that positive trend. But if we all have different approaches to it, the clients would get confused. They get fed up and bored with it, and they won’t engage with it. That is really crucial for that. We all agree ESG is important, but without standardization and without a collective view on it, I don’t see how we ever move the door. I just can’t see how that can possibly happen.

Paul McCarney: If you look at some of the traditional risks or perils that underwriters focus on, consider NatCat, some of the commercial property stuff. There are common definitions of some of the property assets that the funds insure and I guess why do they do that? I think partly because there’s the follow on aspect to this here. If everyone has the same understanding of how we define that risk, obviously you could have your own view of that risk and the materiality, et cetera. But if everyone has a different view of the risk, then yeah, I think it can, obviously, as Simon says, causes a lot of inefficiencies. And friction in the market. And I think it’s just natural with ESG and with other emerging risks. You don’t necessarily have that at this stage. You get different views, different vendors. But I guess partly it’s a problem for the market to solve. They have to coalesce around something and put forward a view of what that initial version of the standard is. I think the key thing is it’s not a case of it has to be right in the sense it will never evolve. It has to be something that I think there can be a common understanding of what that is, both for the insurer and obviously, with the broker, but also, I think that Simon says the clients as well. I think you get that evolution that helps to standardize the insurance value chains approach to integrate an ESG, but also helps with the transition that we need.

Juan de Castro: So you what you’re saying is you want the ESG data to be used by underwriters and other people within the organizations. For that to happen, it needs to be easy to use or easy to embed that data within the decision making progress. In order to do that, you need to have a data flow that is almost seamlessly embedded within your process. And to have that seamless flow of data, you need this to be standardized so that brokers are providing this type of data in a consistent manner, or data providers are providing this in a way that you understand the data they are providing.

Paul McCarney: Yeah, that’s it. That’s the word. I’d say definitely. Standardization will really help with adoption here. That’s exactly the discussions we’ve had with brokers and stuff that’s the biggest concern they have is if there’s five different questionnaires, that’s a lot of friction, a lot of overheads in the process. The challenge they will have is either they need to pay to fill that in or the client putting the burden back on the client. Which isn’t great from a customer perspective. So to get adoption, there is going to be this need for standardization.

Juan de Castro: Obviously you work with a number of other insurers. Tell us a bit more about what you see in the industry?

Paul McCarney: I think a lot of the market is taking inspiration from Chaucer/ I think a lot of insurers are sort of seeing the value of what Chaucer are doing and what they themselves could do is they are kind of finalizing their ESG strategy. I think a lot of them are seeing a similar process. What’s our post bind exposure at the moment? What does it mean? And I think that’s a big thing a lot of them are working on just now. So similar to what Chaucer have worked on last year. I think a lot of them see the value of this idea of imposing your own view at the pre bind stage and starting to get the underwriters to consider ESG as a data point as part of the other perils. So the two use cases definitely resonates with the market. I think the engagement point is an interesting one as well. We’re definitely hearing from other insurers that a lot of the data, even the data we’ve got, is still maturing. There’s still more disclosures needed to improve on this. So being able to engage their clients, explain how they’re being assessed and then see how that can encourage more disclosures I think is something that the wider market seems to be quite bought into. So I think clients of ours at the moment and ones we’re talking to, really see this as going way beyond the box ticking. This is about getting the data and getting the workflows so that that data is turning into the analytics that people need to consider ESG within the decision making process. I think that is something over the last twelve months really came through in the marketplace.

Simon Tighe: The point Paul made there about the data maturing is very important. I think we’re very keen to put out there that this is not perfect. Right? Well, what we’ve done is not the final answer. This is not the end game, this is not the end result. We want the market to come together to keep building this to get to the end game. This is our starter for ten, right? And a bit of a shameless plug here. We’ve just updated our sustainability report which is on our website. And in there we actually disclose every single data point that we think is important. We want this to be open to everybody. We want people to understand what it is we’re trying to do and why. And we want people to join us on it. Because without standardization, this thing will die, right? So without participation across the full value chain of insurance, right, we’re talking about clients, talking about insurers, we’re talking about reinsurers, brokers, service providers, everybody without their buy-in, this thing dies. And we all know ESG is a problem that we have to work towards and we all need to work together to do it.

Juan de Castro: Simon, when you say the industry getting together, what does it mean?

Simon Tighe: There are many pieces out there. The LMA has a forum on this. We are in active discussions with the Moody’s team to set up a market forum on this particular product. And we want to invite in other insurers, brokers, market participants to actually fit into this. I think for us, this is not a Chaucer or Moody’s product, right? Yes, we have worked together with Moody’s data. We think they’re great, and we think people should engage with Moody’s to do this right. But ultimately we want this to be out there so that we can have other players in the market providing that data. There’s no problem with that. We think Moody’s are the best at it right now, so we think they’re great. But we’ve put the data points out there. We’ve said, here are the data points. This is what we think is right. Let’s get together and let’s work together to remove the burden from everyone.

Paul McCarney: I can echo all that, and I think from our perspective, there’ll be more details coming in a few weeks and this is a call to action to the industry, to join this group. I think with Chaucer, we’ve got a number of other insurers that have expressed a desire to join. So I think we’ll be looking to stand up this group up fairly soon to start that work, to kind of really try and standardize it. And something I think this year we want to try and get the first version published. From our perspective, this is something that will definitely move ahead on. I think it’s the first time I’ve communicated outside of talking with you. So, yeah, there’ll be formal communications done, but I think looking to get to stood up pretty quickly. Because the other thing we’ve seen also that’s interesting is when you mentioned the value chain. We’re starting to start to have a lot of engagement with reinsurers as well. They’re really starting to think through from the point of view of the treaty books, obviously, capital generation, trying to measure what their impact is given the business they take on. So that we’re starting to see the whole value chain now really wake up to this. And I think it’s all been driven by the insurers. And so I think it feels that the time is right now to get this group stood up and see if we can get that kind of common definition to a launch to try to generate better disclosures.

Juan de Castro: So perhaps just one final question for you, Simon, before we wrap it up, which is, as you’ve been embarking on this initiative for the last period, what’s been the response feedback from your brokers partners on what you’re doing?

Simon Tighe: I’d say the feedback has been very positive. As Paul said, we’ve heard the same feedback that they’re worried that each insurer is going to go down a different path and want different things from them. And I think a lot of them are quite relieved to hear that we’re trying to push a market standard. So that’s been very positive. And I’ve had multiple meetings with clients and different people in the industry who are very keen to see a market standard on this and to see a more automated approach again. So the whole goal of this is to remove burden from brokers, clients and underwriters so that it’s not going to be a delay in the process for getting a risk bound, but also for us to understand the risk better. So there’s been very positive feedback out there. Obviously with anything, we are open constructive feedback and we’ve absolutely had that. We are open to criticism and we’re open to speaking to people to try and make this better because like I said, there is no in chance in saying we’re done, finished here, and the market should take it. It’s the start to it. We’re not wedded to it. We want to make it for the market.

Paul McCarney: To give you some context as well. I guess from my perspective, we’ve, I think an unprecedented amount of engagement with the market. We’ve had quite a lot of insurers opening the door, asking us to come in and tell the story. What have you done, how does it work? And this is right at the C level, chief executive level and that seems to be, with a lot of insurers, just a real growing interest in getting their head around this and trying to figure out their own plans. It’s what I guess obviously the wider adoption, but I mean, we’ve had interest from Australia, Japan, South Korea. We’re starting to get movement in North America. So it’s not just a Lloyd story, as such, we are seeing a lot of traction here on this, given the fact that it is a global issue, it’s not one just for Lloyd’s market.

Juan de Castro: Fantastic. Well, sounds like perhaps this is a perfect point to wrap it up. Sounds like a really fascinating topic that is gaining a lot of momentum with a clear call to action for the industry to get together. So hopefully we’ll do a follow up in a year’s time and we’ll really see the industry coming together around this topic. Simon and Paul it’s been a fantastic chance to have a chat with both of you on ESG. So thank you so much for joining the podcast.

Simon Tighe: Thank you for having me.

Paul McCarney: Thank you.

Juan de Castro: Making Risk Flow is brought to you by Cytora. If you enjoyed this podcast, consider subscribing to Making Risk Flow in Apple Podcast, Spotify or wherever you get your podcast so you never miss an episode. To find out more about Cytora, visit cytora.com. Thanks for joining me. See you next time.