Insurance has always been about predicting the unpredictable. For centuries, the industry has relied on actuarial models, statistical probabilities and balance sheet metrics to manage risk. Yet the world insurers operating today are no longer shaped by financial performance alone. Climate change, biodiversity loss and supply chain fragility are reshaping what it means to be low risk.
In 2024, global economic losses from climate-related disasters reached USD 137 billion in insured losses, according to Swiss Re. Beyond the immediate financial costs, these events exposed how environmental and social factors can ripple through entire industries, from disrupted logistics, workforce instability and stranded assets.
The problem is that most credit models were never designed to capture such interconnected risks. They rely on historical financials and standardised ratios that miss the systemic vulnerabilities hiding in supply chains or environmental exposure. For example, a manufacturer’s cash flow might appear strong however if its key suppliers are in water-stressed regions or reliant on fossil-heavy inputs, its future resilience looks far less certain.
These are not hypothetical risks anymore. They are emerging as financially material variables. Regulators in Europe, the UK, and Asia are already asking insurers to integrate climate-related data into their underwriting and credit assessments. The European Insurance and Occupational Pensions Authority (EIOPA) has been explicit: sustainability factors are no longer optional considerations but essential for supervision.
The Data Challenge
While awareness has grown rapidly, integration has not. The core obstacle is the lack of usable, comparable, and verifiable data at the scale insurers need. Large listed corporations now publish ESG disclosures, but most counterparties in insurance portfolios are private, mid-market, or SME firms. These companies rarely report detailed sustainability metrics, leaving insurers to fill the gaps with proxy data.
This creates a huge blind spot for insurers trying to evaluate climate or social exposure in their credit books. Without structured information on emissions, labour practices, or supply chain resilience, it becomes nearly impossible to quantify non-financial risk with confidence.
This gap affects not only underwriting decisions but also the insurer’s broader role as a capital allocator. If sustainability-linked risks cannot be priced accurately, capital will continue to flow inefficiently. Resulting in insurers, who are meant to be the economy’s stabilisers, to face mounting uncertainty.
From Financial Risk to Systemic Resilience
Integrating sustainability metrics into credit risk is not simply about compliance. It is about building a more accurate and comprehensive picture of resilience. Environmental and social risks often manifest gradually, but their financial consequences can be severe once they materialise.
By combining financial and non-financial indicators, insurers can identify vulnerabilities earlier, engage clients more constructively, and design products that incentivise resilience. The same sustainability insights that inform credit models can also guide reinsurance strategies, claims forecasting, and corporate engagement.
The direction of travel is clear. The Bank of England’s Climate Biennial Exploratory Scenario (CBES) and the Network for Greening the Financial System (NGFS) have both underscored that insurers must model the long-term implications of climate and transition risk. Yet most firms still struggle with fragmented data and inconsistent frameworks.
How TDH Helps
The Disruption House (TDH) closes the information gap by providing insurers with structured, scalable sustainability intelligence designed for credit and risk analysis.
TDH has developed a sector-specific ESG evaluation framework that uses advanced data science and AI to score companies. Its virtual ESG data analyst reviews public disclosures, company websites, and available artefacts such as sustainability or policy documents. This allows insurers to access sustainability metrics even for private and mid-market firms that lack formal reporting.
This approach allows insurers to:
- Identify environmental and social exposures across entire credit portfolios
- Benchmark resilience indicators between counterparties or sectors
- Integrate consistent ESG metrics into underwriting and reporting frameworks
- Extrapolate missing data using AI trained on baseline datasets
With a database seeded from thousands of UK companies across 11 sectors and 77 industries, TDH provides the transparency needed to make sustainability data comparable.
The Future of Insurance Is Informed
The insurance industry has always been built on information advantage: knowing what others overlook. As the economy becomes more exposed to climate and social risks, that advantage now depends on sustainability intelligence.
By combining explainable AI with ESG data, TDH equips insurers to move beyond incomplete disclosures and toward proactive risk management. The future of underwriting will not just price risk; it will understand it. Those who can see the connections between sustainability and stability will define the next generation of insurance.
