Enhancing sustainability: The impact of ESG factors in global insurance performance

Sustainability has become a critical concern in finance, in particular for the insurance industry, which faces rising environmental and social risks. This paper examines the influence of environmental, social, and governance (ESG) factors on the performance of global insurance companies. Using a comprehensive dataset of 22 life and 59 non–life insurance firms from 2013 to 2022, we employ panel data analysis to explore the relationship between ESG scores and key performance metrics. Our findings reveal that higher ESG scores are significantly associated with a higher return on assets, more efficient management of expense and loss ratios, and increases in investment returns. These results show the importance of incorporating ESG factors into insurance decision-making to enhance sectoral resilience and corporate performance. The study concludes by emphasizing the need for insurers to leverage their technical expertise and strategic risk management capabilities in order to address sustainability challenges effectively.