From policy to practice: Unpacking ESG expectations of insurance customers

Sustainability is no longer a buzzword; it’s a strategic imperative for industries worldwide – and insurance is no exception. Environmental, Social, and Governance (ESG) considerations are transforming customer expectations, regulatory landscapes, and insurer strategies. But how significant are these factors in the decision-making processes of insurance customers across the globe?

Our latest study, “From Policy to Practice: Understanding the ESG expectations of insurance customers along the customer journey”, explores this very question. With data from more than 7,000 customers across six countries – USA, Canada, UK, Switzerland, France, and Germany – this report offers invaluable insights into the role of sustainability in shaping the future of insurance.

Key findings at a glance

1. Sustainability priorities vary across markets

While sustainability resonates with many customers, its perceived importance and specific priorities differ across regions. Social aspects of ESG are the top concern in Europe and Canada, with Swiss and German customers placing strong emphasis on issues like social responsibility. Meanwhile, environmental factors dominate in the USA.

However, our findings also indicate that a significant portion of customers do not factor sustainability into their insurance decisions at all. For these customers, price, coverage, and claims processing efficiency remain the most critical factors, suggesting that ESG-aligned insurance offerings must be carefully tailored rather than assumed to be universally appealing.

3. Regulatory impact and opportunities for insurers

Regulatory frameworks, especially in Europe, are driving transparency and innovation. Initiatives like the EU Taxonomy and Corporate Sustainability Reporting Directive (CSRD) are pushing insurers to embed ESG into governance, products, and processes. Insurers operating in more lightly-regulated markets, like the USA, face fewer mandates and greater flexibility to innovate – though this also increases the risk of greenwashing due to the lack of stringent oversight.

Without clear regulatory guidance, insurers in these markets may promote ESG initiatives without substantiating their claims, leading to skepticism among customers. This further complicates the question of how to position sustainability in insurance: customers who are highly engaged in ESG topics demand transparency, while others may remain indifferent or even skeptical about its relevance to their policies.

4. A trust-building opportunity

The study highlights a direct correlation between sustainability perception and customer loyalty. Insurers perceived as leaders in ESG enjoy higher Net Promoter Scores (NPS). For example, Swiss customers who view insurers as sustainable are significantly more likely to recommend their provider.

Yet, for a notable segment of customers, sustainability is not a deciding factor. Some policyholders remain primarily concerned with financial protection, reliability, and ease of claims processing. For this group, ESG initiatives are neutral at best – unlikely to drive higher engagement unless they also offer clear financial or service-based advantages.

6. Product innovations to bridge the gap

From “pay as you drive” motor insurance to green building reconstruction options, insurers are introducing innovative sustainable products. Yet, challenges like the uninsurability of high-risk sectors highlight the need for balance between sustainability and affordability.

In markets where ESG enthusiasm is lower, insurers may need to integrate sustainability features in ways that do not increase costs for customers. Rather than offering explicitly green policies, they may see greater success by embedding sustainability principles into standard offerings, ensuring they appeal to both ESG-conscious and cost-conscious customers.

7. Customer-centric claims management

The claims process is emerging as a hub for ESG integration. Digitized claims reduce emissions, while sustainable repairs and proactive loss prevention measures build customer satisfaction and trust.

Yet, just as with insurance products, the success of these initiatives depends on how they are framed. For some customers, digital claims and sustainable repair options enhance their experience. For others, particularly those less engaged with ESG topics, such measures may be seen simply as efficiency improvements rather than sustainability-driven changes.

Why this study matters

The findings emphasize that sustainability is more than a regulatory requirement. It can have an influence on the decision-making process for insurance customers. Companies must adapt their strategy to different customer groups to effectively pursue their ESG objectives, ensuring compliance with evolving regulations while meeting the growing expectations of modern customers. By embedding sustainability across the value chain – governance, operations, products, and claims – insurers can achieve:

• Enhanced customer satisfaction and loyalty
• A stronger and more competitive brand
• Greater resilience to regulatory and market changes

However, they must also recognize that for some customers, ESG is not a decisive factor. By striking the right balance between sustainability integration and core insurance fundamentals, insurers can ensure they remain relevant across all customer groups.