6 March 2024

Motor insurance + AI = powerful combination for ESG management

Road going between green islands. Profile image of Jim Noble.

Commercial motor insurers play an important role in helping to shape the future of mobility. And, with ever-increasing ESG reporting regulations, including the EU’s Corporate Sustainability Reporting Directive (CSRD), the role of the insurer is evolving further.

In fact, with the adoption of artificial intelligence (AI) technology, motor insurance companies have the potential to take center stage when it comes to leading positive change for the future of the planet.

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How are ESG regulations including CSRD impacting motor insurance companies?

The insurance industry revolves around risk. And, therefore, as ESG concerns become increasingly important to organizations globally, motor insurance companies are facing growing pressure to help their customers measure, manage, and report on their environmental and social-related risks.

The EU’s CSRD is the most comprehensive ESG reporting regulation to date, increasing the number of companies required to report on ESG matters to around 50,000 globally. And it’s important to note that its scope includes international companies with significant operation within the EU. Not just that, but as the most comprehensive ESG reporting regulation so far, the CSRD is bound to become a benchmark on which other countries and jurisdictions base their own legislation.

In a phased approach, the CSRD requires in-scope companies to include a distinct and comprehensive ESG section within the management report. Large enterprise companies are required to submit their first reports in January 2025, with small and medium companies coming into scope further down the line.

CSRD: Key points to note

The CSRD is not unique to the insurance industry, but plenty of insurance companies in the EU, and around the world, will fall under its scope.

The companies that do fall within the CSRD’s scope must report on sustainability matters from a ‘double materiality’ perspective. In simple terms, this means looking at the main ESG opportunities and risks to the company and those from the company to the planet.

Important points to be aware of:

  • Companies in scope of CSRD must produce disclosures in accordance with the European Sustainability Reporting Standards (ESRS)
  • CSRD requires companies to report by using a ‘double materiality’ approach
  • Reported sustainability information must be audited
  • CSRD includes the reporting of environmental, social and governance matters

Remember that, while the CSRD presents challenges to the insurance industry, it also brings opportunities. In particular, it enables motor insurance companies to support their customers with the measurement and mitigation of ESG risks, in turn strengthening relationships and trust. Not only that, but it empowers motor insurance companies to lead the way with influencing positive change by creating insurance products that incentivize safer, more sustainable driving behaviors.

How AI helps insurance companies manage CSRD

Today, motor insurance companies no longer need to rely on guesswork, or years of data collection to understand a driver’s risk profile. Instead, with AI, they can access instant real-time insights that not only enable them to foresee risk, but also climate impact.

It is this intelligence that helps insurers to get a secure handle on CSRD reporting. Yes, the rapidly evolving ESG reporting landscape brings a new level of scrutiny to insurance companies, for both their own businesses and the businesses of those insured by them. But AI enables insurance companies to access the data insights required to fulfil the mobility requirements of CSRD requirements, as well as other ESG regulations.

Using AI to uncover quality data for CSRD

For motor insurance companies, the CSRD considerations should extend beyond their own operations to risks and opportunities across their value chains and portfolios. And the data required is extensive. From a mobility perspective, insurance companies must report on multiple ESG factors, including climate change and pollution under ‘environment’. From a social perspective, they must report on their own workforce, workers in the value chain and consumers & end users.

This rapidly increases demand for quality data relating to driver safety and carbon footprint. Thankfully, AI has made this data easy to access, with insurers now able to rapidly convert their existing data into crash probability and climate impact.

Using Greater Than’s AI to measure, act, and report under CSRD requirements

At Greater Than, our AI is globally unique in that it measures the human influence on risk and emissions. This means that, with our AI, motor insurance companies can obtain harmonized data regardless of location or vehicle type. This makes it possible for insurers to harmonize data from different sources, benchmark performance across mixed fleets and quickly pinpoint areas for potential CO2 emissions reductions and driver safety improvements.

In relation to CSRD requirements, this level of insight is particularly valuable as it helps insurance companies to understand the impact of their operations on the planet and helps with the setting of targets to minimize negative impact. The data can be compiled into ready-made ESG reports, shared in digital format for insertion into management reports, and is supported by traceability data, ensuring it is audit ready.

It’s easy to get started with using AI for CSRD

If you’re a motor insurance company keen to access new insights to fulfil the mobility aspect of CSRD or other ESG requirements, you can start sharing your data with us right away. All we need is 1km of driving data to start measuring crash probability and climate impact.

Our new ESG compliance package brings together our most popular products into one comprehensive package, ideal for meeting CSRD requirements. Alternatively, we’re happy to discuss your requirements and tailor a package to suit you. Book a meeting to tell us your needs.