Long-term investment & sustainable finance

Ensuring the right investments for customers and for society to thrive 

The insurance industry is Europe’s largest institutional investor and an important provider of stable, long-term funding for governments and businesses. Investing is a consequence of the insurance business model: policyholders pay premiums upfront, which insurers then invest until the claims and benefits become due. This can be weeks or months in the case of motor policies, but years or even decades for savings and pension products. It is this long-term business model that creates insurers’ ability, and need, to focus on the long-term performance of assets rather than short-term market volatility, and their ability to invest in illiquid assets and avoid procyclical behaviour.

European insurers planned to allocate approximately €150bn to sustainable investments by 2020

(2019 Insurance Europe estimate)

These advantages allow insurers to use investment returns to benefit customers either directly in their savings and pension products or indirectly through lower premiums on motor or household policies. Insurers are also uniquely positioned to contribute to sustainable economic growth and to help finance the transition to a carbon-neutral, resource-efficient and more sustainable economy. Insurers have been at the forefront of sustainable investment for many years, taking concrete actions and embedding environmental, social, and governance (ESG) considerations in their sustainability initiatives and strategies. The European Green Deal will allow and require insurers to do even more and will make it easier to track progress towards the goal of zero net emissions of greenhouse gases by 2050.
To enable insurers to maximise their investment potential for customers and contribute to sustainable economic growth, the right regulatory conditions need to be in place. It is especially important that regulation captures, and does not undermine, the benefits of insurers’ long-term business model, and does not push insurers towards short-termism or create unnecessary barriers to investing.

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Contacts

Olav Jones

Deputy director general/Director, economics & finance
+32 2 894 30 13

Cristina Mihai

Head of prudential regulation & international affairs
+32 2 894 30 25

Andrea Pintus

Senior policy advisor, investments
+32 2 896 48 38