Category: ESG fundamentals · Reviewed by Al Jabbar, Broker · Specialist Risks · Last reviewed 2026-06-10
An ESG underwriting policy is the documented framework setting an insurer’s or syndicate’s environmental, social and governance criteria for risk selection, pricing, exclusion and engagement. Lloyd’s of London expects each managing agent to operate such a policy, and major UK composite insurers publish theirs on their corporate websites.
Category: ESG fundamentals Also known as: sustainability underwriting policy, responsible underwriting policy, ESG strategy underwriting Established / Date: Standardised in UK market practice c.2021 following Lloyd’s ESG strategy Related concepts: ESG insurance underwriting, ESG exclusion criteria insurance, ESG screening insurance
An ESG underwriting policy is a written document approved at board or senior committee level that codifies the insurer’s approach to ESG considerations in underwriting. Typical components include the policy’s scope (lines of business and geographies covered), the ESG factors considered, exclusion criteria with quantitative thresholds, screening processes, due diligence requirements, escalation procedures for borderline cases, engagement policy for insureds in high-impact sectors, transition timelines (for example, coal, oil sands, tobacco run-off), and governance arrangements including reporting lines and review frequency.
In the UK context, the policy is typically aligned with the Principles for Sustainable Insurance (June 2012) [1], the PRA’s SS 3/19 climate risk expectations [2], the Lloyd’s market-wide ESG strategy of December 2020 [3] (where applicable), and the insurer’s own published net-zero or other climate commitments. The Association of British Insurers’ Climate Change Roadmap of July 2021 also informs UK general insurers’ policies [4].
ESG underwriting policy is operationally distinct from ESG investment policy, although the two are commonly developed and governed together to ensure consistency across underwriting and asset management activities.
UK regulatory expectations on ESG underwriting policy derive from prudential supervision rather than specific statute. The PRA’s SS 3/19 of April 2019, updated July 2020, sets four expectations for PRA-authorised insurers: embed climate-related financial risks in governance, develop a strategic approach to risk management including scenario analysis, incorporate climate risk in the Own Risk and Solvency Assessment under Solvency II, and disclose climate risk in line with TCFD [2]. Each expectation requires an underlying documented policy.
Lloyd’s of London expects each managing agent to publish and implement an ESG strategy and underwriting policy consistent with the market-wide framework. The FCA’s PS23/16 SDR regime applies to investment-side ESG policies but indirectly influences underwriting-side documentation expectations through the broader supervisory dialogue on greenwashing risk [5]. The Senior Managers and Certification Regime allocates accountability for the policy, typically to the Chief Underwriting Officer or Chief Risk Officer.
UK composite insurers including Aviva, Legal & General, Zurich UK and AIG UK publish ESG underwriting policies that commonly include: thermal coal, oil sands and Arctic energy exclusions; controversial weapons exclusions; tobacco production exclusions; and engagement criteria for transition-eligible sectors. Lloyd’s managing agents publish ESG strategies aligned with the market-wide framework, with annual progress disclosed.
The policies typically address: specific exclusion thresholds (commonly 5% or 10% revenue tests); transition timelines (often 2030 for coal-related risks in line with Lloyd’s); engagement criteria for high-impact insureds (e.g. requirement of a credible transition plan); and review frequency (annual or biennial). Insurers’ policies are increasingly cross-referenced in their TCFD-aligned disclosures and Climate Financial Risk Forum guidance submissions.
For UK businesses, the insurer’s ESG underwriting policy is the practical determinant of whether and on what terms cover is available. Larger corporate insureds may engage with insurers’ ESG underwriting teams at the strategic level, particularly where transition planning is material. Brokers should review the policies of likely insurer participants before placement.
UK SMEs are less likely to engage directly with insurers’ ESG policies but will see the policies’ effects through proposal-form questions, exclusion endorsements and pricing differentiation. Familiarity with the major insurers’ policies allows brokers to channel placements towards the most receptive markets.
A UK-based offshore wind developer applies for its operational property and business interruption programme. The broker reviews three lead insurers’ published ESG underwriting policies and identifies that one operates a dedicated renewable energy facility with preferential terms and broader cover (including grid connection delay buy-back). The placement is structured with this insurer as lead, capturing both the favourable ESG positioning and the technical capability that follows from the insurer’s dedicated facility. The renewal is offered at preferential pricing reflecting the insured’s ESG profile and the insurer’s strategic focus.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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