Responsible Investment in ILI

Therefore, we aim to integrate sustainability into the Insurance Linked Investments (“ILI”) process, alongside risk and return. PGGM calls this approach 3D Investing.

By investing in ILI and providing capital to (re)insurers, we help to keep insurance for consumers against extreme events affordable. Moreover, ILI contributes to helping countries, people and businesses to deal with the effects of natural disasters which are becoming more and more frequent because of the climate change.  By investing in ILI, we help the insurance companies to increase their capacity to insure more homes and business and thanks to that, more funds become available to recover from, and to increase resilience against the natural disasters. 

Based on the criteria and methodologies of Sustainable Development Investment (“SDI”) Asset Owener Platform PFZW has identified ILI as a sustainable development investment under the UN principles for Sustainable Development Goals (related to SDG #11, sustainable cities and communities sustainable cities and communities and, SDG #13, climate action).  
 

Sustainability in due diligence process

As part of our core beliefs, PGGM integrates sustainability factors in the due diligence (“DD”) process of its ILS managers and (re)insurance partners.

During the assessment of the ILS managers and (re)insurance partners and the assessment of quality of the risk management process, we investigate which sustainability-related policies the ILS managers and (re)insurers have implemented and to what extent the convictions behind these policies are part of their culture.

We conduct a sustainability-linked DD for each investment using our proprietary DD framework so that we can score and benchmark our ILS manager and (re)insurance partners on their progress

We believe that the sustainability debate surrounding the ILI industry has been focusing on the environmental aspects. More specifically, the discussion circles around the climate change. The industry believes that environmental risk induced by climate change need to be largely accounted for in the pricing of risk. In other words, the risk takers, including PFZW, must be compensated for possible elevated frequencies of natural catastrophes and for possible higher severities of such events as well. This leads to the notion that such risk must be, first and foremost, well captured in the catastrophe models and view of risk of our partners.