At the end of January, the UN Environment Programme’s Financial Initiative met for the Latin America and the Caribbean (LAC) regional roundtable in Bogotá, Colombia, and one of the key outcomes was the Bogotá Declaration on Sustainable Insurance (BDSI) - a commitment from insurance industry leaders in the region to support the achievement of the Sustainable Development Goals by 2030.
Already, several insurance companies have signed the declaration, including MiN members Seguros Bolívar, INS de Costa Rica, Brazil's National Confederation of Insurers (CNseg), and Federacion de Aseguradores Colombianos (FASECOLDA). As Seguros Bolívar explains, they have joined with leading insurance companies in the region “to integrate sustainability into our operations and strengthen resilience. We collaborate with the banking sector, government, investors, and civil society…because when people live in peace, the country progresses.” This means the BDSI will not only have a positive impact for populations in this region, who are fighting to build resilience against the consequences of climate change, but it will also support the long-term, sustainable growth of the insurance industry. It is a win for everyone.
What is the Bogotá Declaration on Sustainable Insurance?
This declaration of commitment has five key aims. Firstly, to promote sustainable insurance practices among companies in LAC within their core operations including risk management, underwriting and investment decisions. Secondly, it aims to enhance resilience through risk management and insurance services and products that support vulnerable communities affected by climate change. Another aim is to foster collaboration within the industry – including with other companies, regulators and policymakers - through forums, conferences and workshops. The fourth aim is to raise awareness about the importance of sustainable insurance practices across the region. And, finally, to build capacity by providing training and resources on these topics to insurance professionals.
These goals align with the outcomes of the 15th Meeting of the Conference of the Parties (COP) to the Convention on Biological Diversity (CBD) which culminated with the Kunming-Montreal Global Biodiversity Framework, as well as the outcomes of COP 28. By signing the BDSI, the industry is committing to actions that will support all these agreements.
To achieve these aims, the BDSI outlined six action points for the insurance industry.
What does this mean for inclusive insurance?
By setting these action points, the insurance industry is not only aiming to improve the lives of the most vulnerable in LAC communities, but it is also taking steps to protect the long-term future of the sector. For example, ESG issues present a shared risk to everyone, including insurers, businesses and society more broadly. Encouraging insurance companies to do risk assessments in this area and put measures in place to address the challenges, will protect the whole industry.
The BDSI also aligns with other international agreements that aim to tackle climate-related challenges and improve standards of living for the vulnerable, such as the Sustainable Development Goals and the Kunming-Montreal Global Biodiversity Framework. These action points give tangible steps that the insurance industry in LAC can take to ensure they are moving closer to meeting their responsibilities within these agreements.
As Mabyr Valderrama Villabona, Sustainability Director at FASECOLDA explains, “the journey towards sustainable and inclusive insurance is not just an industry obligation but a societal imperative. The Bogotá Declaration lights the path forward, and with the concerted efforts of all stakeholders, we can transform these principles into tangible actions. This collective endeavour will ensure that the insurance sector contributes significantly to the sustainable development goals, benefiting not only the present but also future generations."
Having to address these action points will also encourage innovation within the insurance sector to ensure that it is developing products that meet the needs of the communities that they serve. Climate and nature-related risk have created new challenges that aren’t sufficiently addressed with traditional insurance products, so tackling them will require new ways of thinking. If the users of insurance disappear because they can no longer live in the current environment, then the insurance industry itself will be unlikely to survive. Change and innovation enables the evolution of the industry which strengthens resilience in the long-term.
Finally, innovation is also likely to attract greater investment in future. The world is beginning to understand the massive impact that climate change is having, and that it is no longer just a problem for developing countries but for everyone. The knock-on effects are felt beyond these communities. As a result, there is a greater willingness for countries and private enterprise to invest in sectors and initiatives that are addressing this challenge.
Thoughts from the industry
Overall, the BDSI is a positive step towards achieving the international obligations which the insurance sector contributes to. Already, major insurance companies in LAC have signed this declaration and others are being encouraged to do the same. For those that have already signed, this commitment is an important reminder of the important role insurance can play in the region. As Valderrama Villabona highlights, “In the Latin America and the Caribbean region, where the impact of climate change and social inequalities are acutely felt, the insurance industry has a special responsibility to lead by example. We must actively take steps to address the Declaration's goals, focusing on innovation, inclusivity, and sustainability to meet the unique needs of our diverse populations.”
And for Tomás Soley Pérez, General Superintendent of Insurance at Superintendencia General de Seguros (SUGESE), “the fact that UNEP FI's Principles for Sustainable Insurance have been adapted to the reality of Latin America and the Caribbean is key for a region facing unique socioeconomic and environmental challenges, including climate change. Good sustainable insurance practices can help address these imperatives from a governance and risk management perspective, but it also opens the door for action on the larger implication of implementing inclusive insurance as a way to address challenges that our region faces. For Sugese, as a PSI supporting institution since 2016, being a signatory of the Bogota Declaration on Sustainable Insurance represents a reaffirmation of our commitment to the principles and sustainable development in Costa Rica and the region.”
By bringing together the region’s industry in this joint commitment, we will likely see greater innovation within the insurance sector over the coming years. This will not only increase resilience within the communities it serves, but also across the industry itself. We’re looking forward to following the outcomes of the declaration, and to see how the inclusive insurance landscape evolves over the coming years.