Doing the Right Thing: Why Social and Governance Matter More Than Ever in Insurance

History suggests the UK often chooses a different path - one rooted in public trust, long-term thinking, and stronger regulatory oversight.

In insurance, the phrase "doing the right thing" is often used to describe how we support customers through difficult moments. But in today’s world, "the right thing" goes beyond paying claims fairly or offering suitable cover. It means embedding fairness, transparency, and accountability across our businesses - not just to protect people, but the planet too.

That’s where the ‘S’ and ‘G’ in ESG come into play: Social and Governance. These aren't just boxes to tick on a sustainability report. They’re everyday business decisions that shape real outcomes — for customers, consumers, colleagues and communities.

It’s a Matter of Duty

Since the introduction of the FCA’s Consumer Duty, there’s been a welcome shift in tone across financial services. The Duty demands we avoid causing "foreseeable harm" and deliver good outcomes for customers. Many of the risks are social and governance failures in disguise.

Take claims handling. If your systems consistently underpay certain groups, or your processes are too complex for vulnerable customers to navigate, that’s not just poor service - it’s a governance failure with social consequences. Or think about supply chain practices: if you’re squeezing contractors to the point where corners are cut on safety or environmental standards, you’re exposing your brand and your customers to harm.

Principled Leadership in a Polarised World

Across the Atlantic, ESG has become a political minefield. Several US states are actively pushing back against ESG investing and regulation — with federal responses adding to the complexity. Unsurprisingly, this is creating turbulence in global markets and posing a values test for businesses worldwide.

For UK firms, the question is clear: do we follow suit, or do we hold the line?

History suggests the UK often chooses a different path — one rooted in public trust, long-term thinking, and stronger regulatory oversight. There are several standout examples:

• Data Privacy: The UK (alongside the EU) led the way with GDPR, setting a global benchmark for consumer data protection. The US still lacks a unified federal approach, relying instead on a fragmented state-by-state system.

• Food Safety: UK food regulations ban or restrict additives like ractopamine and chlorine-washed chicken - common in the US. This reflects the UK’s precautionary principle, prioritising consumer protection over potential commercial gain.

  
  

Each of these decisions demonstrates a willingness to forgo short-term advantage in favour of public welfare and sustainable outcomes. It’s governance in action - and a clear expression of social responsibility.

Now, UK insurers have a fresh opportunity - and arguably a responsibility - to lead by example. With our influence across sectors, supply chains, and millions of lives, we can help shape standards that truly protect people and planet, even when it’s not politically popular.

Governance with integrity and socially conscious choices aren’t just ethical. In a risk-based business, they’re commercially smart. Especially when others step back, leadership matters more.

Small Decisions, Big Impact

Social and governance risks usually stem from blind spots, not bad intent. They show up in everyday choices — who we hire, how we train, how we measure success, and what we reward. The fixes often start with small, pragmatic changes.

Imagine an insurer reviewing its procurement process and uncovering that some subcontractors are waiting up to 90 days for payment. That kind of delay puts serious pressure on smaller firms—and in sectors like waste handling, it can push environmental compliance off the priority list.

Now imagine that same insurer decides to shorten payment terms and introduce a supplier helpline for queries and support. The result? Fewer complaints, stronger on-the-ground relationships, and more accurate environmental reporting. It's a simple intervention with powerful ripple effects: better social outcomes, stronger governance, and ultimately, better business.

Measure What Matters

Good governance isn’t about adding more rules - it’s about clarity and accountability. The best firms are measuring the downstream impact of their decisions, not just the inputs. That means asking: What happens to the customer experience when we change this policy? Who benefits? Who loses out? What are the unintended consequences?

Just like we track loss ratios or claim repudiation rates, we should track harm - and learn from it. That includes harm we didn’t mean to cause. Did a digital-only claims process inadvertently exclude elderly policyholders? Did a cost-saving measure increase the carbon footprint of a repair? These are governance issues as much as operational ones.

The Bottom Line

At its heart, ESG is about how we run our businesses. Social and governance decisions influence trust, loyalty, risk exposure, and brand reputation. They shape whether we’re seen as part of the solution — or part of the problem.

Doing the right thing, consistently and transparently, is good business. But it takes more than slogans. It takes leadership, evidence, and a culture of accountability.

As ESG comes under pressure globally, the UK insurance sector has a chance to lead — not just comply. That leadership starts with the choices we make every day.