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Principles for Sustainable Insurance 2018 QBE Insurance Group Limited
Contents About QBE Insurance Group
QBE is listed on the Australian Securities Exchange (ASX) and
headquartered in Sydney.
Principle 1 3 We employ more than 12,000 people in 31 countries. QBE is a general
insurance and reinsurance company. Across our operations, we offer
commercial, personal and specialty products and risk management
Principle 2 4 solutions to our customers. Our purpose is to give people the
confidence to achieve their ambitions.
Principle 3 5
Principle 4 6 About this report
This document outlines QBE’s progress towards implementing the
Appendix 7 Principles for Sustainable Insurance (PSI). This disclosure refers to
and should be read in conjunction with QBE’s annual reporting suite,
particularly the 2018 Sustainability Report (refer to the Appendix for a
copy of Sustainability Report).
The Principles for Sustainable Insurance are a framework for the global
insurance industry to address environmental, social and governance
risks and opportunities. QBE became a signatory to the PSI in
December 2015, and they are an important contributor to the approach
we take to embed sustainability issues into our decision-making.
Principle 1
We will embed in our decision-making environmental, social and
governance (ESG) issues relevant to our insurance business.
QBE’s 2018 Sustainability Report (the Report) provides an overview of our approach to sustainability, including our sustainability
framework, governance and management, ongoing stakeholder engagement, memberships and industry collaboration,
materiality, and our role in helping achieve the United Nations Sustainable Development Goals (SDGs).
A focus on sustainability is essential to our ability to deliver on our purpose, and our work in this area is underpinned by
a refreshed Sustainability Framework described on the following page. This Framework will assist us to further integrate
sustainability across our international business and our decision-making processes.
2
QBE Insurance Group
Principles for Sustainable Insurance 2018
Sustainability Framework:
Our approach to sustainability
Responsible
investments
People and Sustainable
Iden
culture insurance
Ma n a g i ng r i s k s
t i fy
ing opportunitie
We give people the
their ambitions
s
Customer and Operational
community excellence
Governance
The Report provides an overview of each focus area and highlights progress throughout the year. Further information
about how ESG issues are embedded into our decision-making processes can be found throughout these sections of the
Report and on our website.
Sustainability governance and management There are several teams and committees to drive
The highest governing body for sustainability-related issues sustainability across the business including:
is our Group Board of Directors. The Board is supported by
• Group Sustainability team;
the Board Risk & Capital Committee (BRCC) which oversees
and guides QBE’s sustainability approach, initiatives and • Group ESG Risk team;
reporting requirements. The Group Sustainability function,
operating under a dedicated Group Head of Sustainability, • Group Responsible Investments team;
reports on sustainability strategy, performance and activity
• Head of Environment;
at each BRCC meeting (six meetings were held in 2018).
• Sustainability Committee; and
Our Group Executive Committee (GEC) reviews and
approves QBE’s sustainability agenda and priorities. • ESG Business Policy Committee.
The GEC also receives reports on sustainability performance
throughout the year.
3
QBE Insurance Group
Principles for Sustainable Insurance 2018
QBE has other internal governance forums whose members to risk management, no matter how complex, and listen to
have specialist skills to understand and address new and our customers’ needs to deliver tailored solutions.
existing sustainability issues. These include:
As we work to further embed sustainability into our
• Group Emerging Risk Forum; decision‑making, we actively manage current and emerging
ESG risks and opportunities. In 2018, we formed an ESG
• Climate Change Working Group; Risk team to analyse and help manage these risks across
the business. Our new ESG Business Policy Committee also
• Group Underwriting Committee;
discusses and develops specific ESG policies for application
• Conduct Risk Working Group; throughout the business.
• Premiums4Good Global Steering Committee; Our Group Underwriting Standards support our
commitment to, and reflect our definition of, responsible
• Diversity & Inclusion Council;
underwriting. Further information can be found in the
• Health & Safety Working Group; and “Sustainable insurance” section of the Report.
• QBE Foundation Global Committee. Our risk management processes and systems are robust
and aligned to global best practice. Our Group Chief Risk
Further information about QBE’s sustainability governance Officer’s report in the 2018 Annual Report contains further
and stakeholder engagement can be found in “Our detail about our approach to risk management across our
approach to sustainability” in the Report. business.
Our role in the United Nations Sustainable ESG in insurance underwriting pilot
Development Goals
QBE is part of the core project team for the
We believe in, and support, the aims and objectives of the development of the PSI ESG in Underwriting guidelines
United Nations Sustainable Development Goals (SDGs). published in February 2019. These guidelines are
At QBE, we are working to align our sustainability agenda to currently undergoing public consultation until 30 June
support advancement of these global goals. As a universal 2019, with the final version released in December 2019.
agreement to work towards a better future, the SDGs align
closely with our own purpose to give people the confidence
to achieve their ambitions. Product and service development
We reviewed all 17 SDGs to understand their relevance to Through our products and services, we help
our business and stakeholders. Our assessment considered customers and clients address sustainability issues.
alignment of the SDGs against our purpose, business Examples include:
strategy, sustainability framework, products and services
• We introduced a new mobile offering for selected
and business initiatives, as well as the interconnectedness
new clients in Europe to make fleet telematics more
and interdependencies of the SDGs.
accessible. The solution allows clients to reduce
All of the SDGs are relevant to our business in some way. risk and fuel use while encouraging safe-driving
However, we contribute to the achievement of some SDGs behaviours, as well as giving our underwriters the
more directly than to others. We have therefore chosen to data they need to offer affordable premiums.
focus our actions on five goals which align most closely to
• We insure water utility companies in many parts
our purpose and strategic business priorities. This is where
of the world through our international portfolio. Many
we can have the greatest impact. Further information about
of these companies are at the forefront of providing
our role in the global sustainability agenda can be found in
new solutions for sustainable management of water
“Our approach to sustainability” in the Report and on our
in their territories.
website here.
• Our rehabilitation services, provided through our
Risk management and responsible underwriting European Operations, focus on early intervention
QBE provides a broad range of insurance products to to assist injured parties, protect our clients and their
personal, business, corporate and institutional customers. claims position. This helps injured people get back to
As a proud signatory to the PSI, we take an active approach work promptly, while reducing claims costs.
4
QBE Insurance Group
Principles for Sustainable Insurance 2018
• We work with construction companies that are Responsible investment
improving the health and safety of their workforces As a global investor and committed signatory to the
through technological solutions. Principles for Responsible Investment (PRI), QBE aims to
contribute to social wellbeing and sustainable development.
• We are also involved in a range of projects using
Building Information Modelling (BIM). As part of the We believe that integrating responsible investing into
Changi Airport expansion, BIM technology makes investment decisions is good for long-term, risk-adjusted
the project safer and helps to ensure a cost-efficient financial returns and aligned to our stakeholders’
environmental design. expectations. Further information about how ESG issues
are integrated into our investments can be found in the
Further information on our sustainable solutions and “Responsible investments” section of the Report.
products can be found in the “Sustainable insurance”
and “Customer and community” sections of the Report.
Principle 2
We will work together with our clients and business partners to
raise awareness of environmental, social and governance issues,
manage risk and develop solutions.
QBE works with clients, business partners and our own In 2018, we continued to give debt investors the opportunity
employees to raise awareness of sustainability issues, to make a positive impact on society. In 2017, we issued a
manage risks and develop solutions. We offer events, Gender Equality Bond, a debt product that incorporates
seminars, tools and publications that help our clients, gender equality with strict investment criteria. Further
brokers and employees build their risk management information about this can be found in the “Sustainable
knowledge and sustainability awareness. We also promote insurance” section of the Report.
sustainability awareness in other ways including our
By choosing QBE as an insurer, our customers make
Global Risk Solutions Practice, publishing market-leading
a difference through their insurance premiums by
insights across our divisions on sustainability-related issues,
contributing to Premiums4Good. In addition, select
Risk Culture Profiling Tool (RCPT) in the United Kingdom,
customers can direct up to 25% of their insurance
engaging directly with teams across the business to
premiums to impact investments – investments in
raise awareness of sustainability, sustainable solutions
securities with an additional social or environmental
and products, impact investing, and promoting financial
objective, such as SIBs, social bonds, green bonds and
inclusion and accessibility. Further information can be found
investments in infrastructure with environmental benefits.
the “Sustainable insurance” and “Customer and community”
Further information can be found in the “Responsible
sections of the Report.
investments” section of the Report.
Earlier in 2018, we released our Supplier Sustainability
Principles which outline minimum expectations of suppliers
doing business with QBE across a range of sustainability
topics. As part of our broader approach to sustainability,
we seek to engage suppliers and partners who share this
understanding and commitment, and who can work with us
to achieve our objectives. Further information can be found
in the “Operational excellence” section of the Report.
5
QBE Insurance Group
Principles for Sustainable Insurance 2018
Principle 3
We will work together with governments, regulators and other
key stakeholders to promote widespread action across society
on environmental, social and governance issues.
QBE engages with governments, regulators and other • Multiple events held by the Accounting for
key stakeholders to promote action on sustainability. Sustainability Leadership (A4S);
Examples include:
• First-ever Ocean Risk Summit in Bermuda;
• Boosting resilience in cities and regional communities
by participating in the Australian Government’s • Inaugural Insurance and Climate Risk Americas
National Resilience Taskforce to develop a framework Conference in New York; and
for financing adaptation and resilience;
• UNEP FI Global Roundtable and Paris Climate
Finance Day.
• Understanding the workforce of the future by working
with the Monetary Authority of Singapore (MAS); Further information about our work with governments,
regulators and other stakeholders to promote action on
• Championing workers’ health and safety in Singapore;
sustainability can be found in the “Sustainable insurance”
and
section of the Report.
• Attending and speaking at business roundtables,
As part of our focus on stakeholder engagement, we are
seminars and events on sustainability on topics
members of, and signatories to, several global and regional
including impact investing, diversity and inclusion,
sustainability-related initiatives. These include the United
climate change, modern slavery, sustainable cities
Nations Environment Programme Finance Initiative (UNEP
and communities, resilience and sustainable finance.
FI), Principles for Responsible Investment (PRI), Investor
We continued to add our voice at key events including: Group on Climate Change (IGCC), Responsible Investment
Association Australasia (RIAA), Carbon Disclosure
• Five of our delegates attending training provided Project (CDP), ClimateWise Principles, Business Council
by the University of Cambridge Institute for for Sustainable Development Australia, and Women’s
Sustainability Leadership; Empowerment Principles (WEPs).
Principle 4
We will demonstrate accountability and transparency in regularly
disclosing publicly our progress in implementing the principles.
We disclose our progress in implementing the Principles for By engaging with stakeholders and reporting on our
Sustainable Insurance annually and discuss the integration of sustainability approach and initiatives, we aim to be
ESG issues across our business in our annual Sustainability transparent and open about our journey, achievements
Report and, where appropriate, elsewhere in QBE’s annual and performance. We are therefore involved in several external
reporting suite. reporting and benchmarking initiatives. Further information
about this can be found here.
In 2018, we disclosed our first report in line with the Taskforce
on Climate-related Financial Disclosures (TCFD). Further
information about our approach to climate change can be
found here.
6
2018
SUSTAINABILITY
Appendix
REPORT
QBE IN SURANCE GROUP LIMITED
7
QBE at a glance
Who we are
QBE is listed on the Australian Securities
Exchange (ASX) and headquartered in Sydney.
We employ more than 12,000 people in over
31 countries.
QBE is a general insurance and reinsurance
OVERVIEW
company. Across our operations, we offer
commercial, personal and specialty products and
risk management solutions to our customers.
Our purpose is to give people the confidence 2018 snapshot 2
to achieve their ambitions. Group CEO message 4
Our approach to sustainability 5
Spotlight: climate change 14
SUSTAINABILITY FRAMEWORK
Where we are 1
Sustainable insurance 16
Responsible investments 22
Customer and community 27
People and culture 38
Bermuda
Operational excellence 47
Governance 55
North American Operations
European Operations
Australian & New Zealand Operations
Asia Pacific Operations ASSURANCE STATEMENT
Equator Re
Group Shared Services Centre 2
Independent limited assurance report 59
1 QBE’s operations as at 31 December 2018. Effective 1 January 2019, our
operations comprised of International (including European Operations
and Asia), Australia Pacific (including Australia, New Zealand, the Pacific
and India) and North America. The Group’s operations in Argentina, Brazil,
Mexico and Ecuador were disposed during 2018. The Group’s operations in
Colombia were disposed of on 1 February 2019 and disposal of operations
in Puerto Rico is expected to complete in 2019. Throughout this Report,
we have included workforce-related metrics as well as greenhouse gas
emissions data from our operations in Latin America
as at 31 December 2018, including those held for sale.
2 QBE’s Group Shared Services Centre in the Philippines provides a
comprehensive range of insurance services to QBE’s customers and
brokers across Australia, New Zealand, Europe, North America and Asia
Pacific such as underwriting support, policy servicing, claims, control and
customer service. It also provides knowledge processing services such
as Finance, Technology, HR Delivery, Data Analytics and Reporting to QBE
businesses globally. QBE Insurance Group Limited | ABN 28 008 485 014
QBE Insurance Group Sustainability Report 2018 1
Overview
As a company that helps people and
businesses protect themselves from risk, QBE has
a focus on sustainability, and the identification
of current and emerging environmental, social
and governance (ESG) trends, is an integral
insurance
Sustainable
part of achieving our purpose, understanding
the needs of our customers and ensuring the
sustainability of our own business.
investments
Responsible
About the cover
QBE aims to support the development of sustainable
cities and communities around the world. Through
an insurance intermediary, QBE provides insurance
community
Customer and
coverage to The Commons, a sustainable urban
development. The Commons is a mixed‑use apartment
building which creates a sense of community. Located
in Melbourne, Australia, the building represents
better quality housing which pays equal attention
to sustainability, liveability and financial return.
culture
People and
excellence
Operational
About this Report
This Sustainability Report covers the activities of QBE across its operations during the financial year ended 31 December 2018. All financial figures
are quoted in US dollars unless otherwise stated. We engaged Deloitte Touche Tohmatsu to provide independent limited assurance over QBE’s global
Governance
greenhouse gas (GHG) emissions data, selected workforce-related metrics and the total number of Premiums4Good impact investments and associated
financial value for the year ended 31 December 2018.
This limited assurance engagement has been undertaken in accordance with the Auditing and Assurance Standards Board’s Australian Standards on
Assurance Engagements ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information and ASAE 3410 Assurance
Engagement on Greenhouse Gas Statements.
The purpose of this was to provide QBE management with limited assurance over the reported data, calculated in accordance with selected disclosure
requirements outlined in the Global Reporting Initiative Standards and QBE’s Sustainability Reporting Framework, including its GHG Reporting
Framework. The full limited assurance statement, which includes a summary of the specific reporting criteria used for each of the selected metrics,
is available at the end of this Report.
statement
Assurance
2
2018 snapshot 1
Shareholder
Net profit after income tax (US$M)
highlights Financial highlights 3
2017 (1,249)
2016 844
Dividend per share (A¢) Combined operating ratio (COR) (%) Net profit (loss) after income tax (US$M)
50¢
2015 687
95.9 % 2014
2013 567
(254)
742
2017 104.5% $1,779M from 2017
Dividend payout (A$M)
669
2018 567
2017 (1,212)
Gross earned premium
by class
Gross ofearned
business
earned
Gross (%)
premium
premium 2016 Other
Other 844
A¢ A$M by class of business
by class of business 2015 687
60 1,500
54
Financial
Financial&&credit
credit
742
50
50
2014
45 1,125
Insurance profit and Accident
Accident&&health
37
health
underwriting result (US$M)
26
30 750
Insurance profit
Marine (loss)
Marine energy & aviation
energy &(US$M)
aviation
826
15 375
Workers' compensation
Workers' compensation
826
0 0
2014 2015 2016 2017 2018 Professional indemnity
480
Professional indemnity
Dividend per share (A¢) $886M from 2017
2018 2017 Public/product liability
Dividend payout (A$M)
2018% 2017% Public/product liability
Commercial & %29.2 % 29.9
88% from 2017 domestic property
Commercial & 29.2 29.9
Agriculture
UnderwritingAgriculture
Motorproperty
domestic & motor casualty 15.7 15.9
result (US$M)
(60)
(507)
& motor casualty 15.712.7 15.9
Agriculture
Motor 12.3 Motor & motor casualty
480
Public/product liability 12.711.1 12.3
Agriculture 10.7
Motor & motor casualty
Earnings (loss) per share (US¢) Professional indemnity
Public/product liability 11.1 7.9 10.77.5
2017 2018
Commercial & domestic property
Workers' compensation 7.3 7.5
29.0¢
Professional indemnity 7.9 7.5 Insurance
Marine, energy & aviation 6.6 6.3 Commercial & domestic property
(loss) profit
Workers' compensation 7.3 7.5
Accident & health
Marine, energy & aviation 6.63.8(loss)
Financial & credit
Accident & health 5.2
6.3
4.9
4.9
5.2Insurance
profit
4.0 4from
$987M % 2017 Underwriting
result
2017 (91.5)¢
Other
Financial & credit
0.5Underwriting
3.8 result
4.0
1.0
6%
Other 0.5 1.0
Net earned premium by type (%)
Cash profit (loss) return on
average shareholders’ funds (%) 2
Net earned premium (US$M)
92% direct and
facultative
insurance
8.0% (1.4)%
11,640 8% inward
2017 3% from 2017 reinsurance
1 The information in the tables above is extracted or derived from the Group’s audited financial statements included on pages 86 to 161 of this Annual
Report. The Group Chief Financial Officer’s report sets out further analysis of the results to assist in comparison of the Group’s performance against
2018 targets provided to the market.
2 Cash profit ROE from continuing operations excluding gains (losses) on disposals.
3 2017 and 2018 figures reflect results for continuing operations only.QBE Insurance Group Sustainability Report 2018 3
Overview
Operational highlights Sustainability highlights
insurance
Sustainable
Average premium rate increase (%) Workforce (%) Greenhouse
gas emissions
32%
reduction (%)
Group‑wide 4 Divisions
North American
Operations 4.1%
5.0%
European
Operations 4.4%
Women in senior
investments
Responsible
10%
Australian &
New Zealand 7.3% management
Operations 4
Asia Pacific
Operations 1.0% Target 35% by 2020
from 2017
QBE Ventures Retention (%)
community
Customer and
3 investments
81% Carbon neutrality (tonnes CO2-e)
47,273 tonnes
CO2-e
Cell reviews
culture
People and
offset through
>500 Premiums4Good (US$M) Climate change
action plan
2021 ambition
excellence
Operational
31 $1 B
Countries of operation
Collaborating on TCFD
and sustainability
Total invested
Governance
Bermuda
$440M
statement
Assurance
4 Excludes premium rate changes relating to compulsory third party motor (CTP).4
Group CEO
message
I am proud of the steps we took in 2018 to progress
QBE’s long-term sustainability journey as we continued
to further integrate sustainability across our business.
This Report describes the actions we are taking to deliver
solutions for our customers to manage current and
emerging needs.
A focus on sustainability is essential to our ability business. It is fundamental to who we are and how
to deliver on our purpose, and our work in this we operate. Our efforts to provide a diverse, inclusive
area is underpinned by a refreshed Sustainability and innovative workplace were recognised with
Framework described on the following page. QBE’s inclusion as a member of the 2019 Bloomberg
In line with our commitment of doing the basics Gender‑Equality Index and in the top 200 companies
of insurance – underwriting, pricing and claims in the Equileap 2018 Gender Equality Global Report
– brilliantly (our commitment to “Brilliant Basics”), & Ranking.
this refreshed Framework will assist us to further
Our impact investment initiatives were also
integrate sustainability across our international
celebrated, with Premiums4Good winning the
business and our decision‑making processes.
Asset Owner of the Year at the Australian Impact
In 2018, we undertook a detailed review of the Investment Awards. The program was also included
United Nations Sustainable Development Goals as a Finalist in the Finance for the Future Awards
(SDGs) to understand the risks and opportunities founded by The Prince of Wales’s Accounting for
each presents for our business and stakeholders. Sustainability Project and the Institute of Chartered
We believe the SDGs align closely with our business Accountants in England and Wales. This program
and provide an opportunity to collaborate with our continues to go from strength to strength and
stakeholders on the issues that matter. just last month, I was delighted to announce our
ambition to grow our impact investments to $1 billion
We have identified an initial five priority SDGs for our
by 2021, up from $440 million today.
business, where we believe we can have the greatest
impact as an international insurer. Throughout this As we continue to build for the future, we are
Report we have included a range of case studies focused on effective ESG risk management across
that show how we have contributed to these five our business. Our long‑term, holistic view of risks and
SDGs throughout the year. opportunities enables us to continue creating value
for our stakeholders and ultimately protects our
Early in 2018, QBE committed to implementing the
organisation’s sustainability.
recommendations of the Financial Stability Board’s
Task Force on Climate‑related Financial Disclosures, Throughout the coming year, we will continue
over a three‑year period. QBE recognises that to build on our progress by engaging with our
a failure to act on climate change will lead to customers, employees, shareholders, investors,
increasingly volatile and severe weather‑related partners and the community to make sure that
events and these are likely to have significant our approach to sustainability across the business
economic consequences. This is a material business responds to the needs of our stakeholders and
risk for QBE, and for our customers, and I am pleased emerging trends. This will strengthen our ability
with the progress we have made on implementing to assist our customers to build resilience in light
our Climate Change Action Plan, which is detailed of a rapidly changing environment, and to give
in our 2018 Annual Report. them the confidence to achieve their ambitions.
I am proud of our continued commitment to
diversity and inclusion. This is essential to our
Pat Regan
ability to embed our cultural attributes across the Group Chief Executive OfficerQBE Insurance Group Sustainability Report 2018 5
Sustainability Framework:
Our approach to sustainability
Overview
Responsible
investments
insurance
Sustainable
People and Sustainable
Iden
culture insurance
Ma n a g i ng r i s k s
t i fy
ing opportunitie
investments
Responsible
We give people the
confidence to achieve
their ambitions
s
Customer and Operational
community excellence
community
Customer and
Governance
culture
As an international insurer and reinsurer, we are In 2018, we reviewed our approach to sustainability People and
focused on the governance and sustainability of our to make sure our initiatives and priorities were
business, being a great employer and on making aligned to our role as an international insurance
excellence
Operational
a positive contribution to the economies and company. Our refreshed Sustainability Framework
communities in which we operate. will help us drive performance and manage risks
across the areas of sustainability that are most
Managing risk is what we do at QBE. It is important
important to our business and stakeholders.
that current and emerging ESG considerations are
This refresh included updating our assessment
built into our decision‑making processes to help
of material issues as outlined on pages 10 to 11.
our customers manage risk through our products
Governance
and services. We take a holistic, long‑term view to This Report outlines our performance and
continue creating value for our stakeholders and initiatives across the focus areas of our Sustainability
ultimately protect our organisation’s sustainability. Framework. It highlights how we work with
key stakeholders to strengthen our collective
impact, and to identify and address ESG risks
and opportunities.
statement
Assurance6
Sustainability governance
and management
Oversight of sustainability Sustainability Committee
The highest governing body for sustainability‑related The Sustainability Committee supports the business
issues is our Group Board of Directors. The Board in the delivery and effectiveness of our sustainability
is supported by the Board Risk & Capital Committee strategy, initiatives and reporting requirements. It
(BRCC) which oversees and guides QBE’s is made up of senior representatives from across
sustainability approach, initiatives and reporting the Group who are involved in the day‑to‑day
requirements. The Group Sustainability function, management of sustainability issues. These
operating under a dedicated Group Head of representatives come from business units including
Sustainability, reports on sustainability performance Risk, Finance, Investments, Investor Relations, People
and activity at each BRCC meeting (six meetings and Culture, Communications, Legal, Company
were held in 2018). Secretariat and Compliance, Operations and Claims.
Our Group Executive Committee (GEC) reviews and The Sustainability Committee is chaired by our
approves QBE’s sustainability agenda and priorities. Group Head of Communications and Marketing,
The GEC also receives reports on sustainability a member of the GEC. This ensures a close
performance throughout the year. alignment with our Group CEO’s agenda.
Driving sustainability across ESG Business Policy Committee
our business The ESG Business Policy Committee was established
in late 2018 by the Group CRO. The Committee is
Group Sustainability function responsible for managing and overseeing activities
The Group Sustainability function drives sustainability to identify and review ESG risks and developing
across our business. This includes development and appropriate policy and decision‑making frameworks.
implementation of our sustainability approach and In addition, the Committee considers and
initiatives, external stakeholder engagement, internal recommends policy positions on ESG risks
communications and engagement, performance that impact underwriting, investment and/or
management and reporting. operations across the Group to the Executive Risk
& Capital Committee.
Group ESG Risk function
In 2018, a Group ESG Risk function was formed. The Other Governance Forums
team reports to the Group Chief Risk Officer (CRO), There is a range of other internal governance forums
a GEC member. It is responsible for coordinating the and working groups whose members have specialist
identification, analysis and management of ESG risks skills to understand and address existing and
and integration into our risk management practices emerging sustainability issues. These include our:
and systems across the business. The team supports
• Group Emerging Risk Forum;
our Climate Change Working Group on managing
• Climate Change Working Group;
our approach to climate risk management.
• Group Underwriting Committee;
• Conduct Risk Working Group;
Group Responsible Investments function
• Premiums4Good Global Steering Committee;
QBE has a dedicated Responsible Investments • Diversity & Inclusion Council;
(RI) function, which reports to the Group Chief • Health & Safety Working Group; and
Investment Officer and the Group Chief Financial • QBE Foundation Global Committee.
Officer, a GEC member. The RI team is responsible for
integrating ESG considerations into the investment Further detail about these committees can be found
decision‑making process. The RI team’s activities are throughout this Report under the relevant sections.
also overseen by the BRCC and, where appropriate,
the Board Investment Committee.QBE Insurance Group Sustainability Report 2018 7
Sustainability Governance Framework
Overview
Highest level of oversight
Group Board Board Risk & Group Executive
of Directors Capital Committee Committee
insurance
Sustainable
investments
Responsible
Drive sustainability across business
Group
Group ESG Business
Group ESG Risk Responsible Sustainability
community
Customer and
Sustainability Policy
function Investments Committee
function Committee
function
culture
People and
Drive strategy in focus areas
excellence
Operational
Group Emerging Climate Change Group Underwriting Conduct Risk
Risk Forum Working Group Committee Working Group
Governance
Premiums4Good QBE
Diversity & Inclusion Health & Safety
Global Steering Foundation Global
Council Working Group
Committee Committee
statement
Assurance8
Stakeholder
engagement
As an international business, QBE operates in a range of increasingly complex
and dynamic marketplaces. We have a diverse range of stakeholders
including customers, investors, employees, regulators, commercial partners
and community groups. It is essential that we work closely and transparently
with them all.
Our stakeholder engagement is designed to enable We regularly consult with leading industry experts,
us to understand our stakeholders’ unique needs, and our people attend external conferences
expectations, perceptions or concerns. This helps and events, to stay well‑informed of emerging
us identify risks and opportunities, and gain the sustainability trends and their potential impact
insights we need, to ensure our strategy, products on our business and stakeholders.
and services continue to meet our stakeholders’
needs and requirements.
Major stakeholder groups and how we engage with them
INDUSTRY, COMMERCIAL
CUSTOMERS INVESTORS EMPLOYEES GOVERNMENT AND SOCIETY
PARTNERS
REGULATORS
Stakeholders
Direct customers Institutional Directors Prudential, Suppliers Media (local,
investors conduct and other national,
End consumers Employees regulators Brokers international,
Retail shareholders social)
Contractors Government (local, Fund managers
Analysts national) NGOs and charities
Financial
Industry institutions Sponsorship
associations partners
Interest groups
Research and
academia
Think tanks
Other community
representative
groups
Engagement mechanism
Direct customer Investor reports Employee Regular meetings Contract and Direct engagement
engagement engagement and briefings mandates
Investor survey (standards) QBE Foundation
Intermediaries presentations Participation (partnerships,
Roadshows, in supervisory Ongoing donations,
Customer surveys Annual General meetings and activities including relationship volunteering)
Meeting events reviews and management
Customer feedback Sponsorships
channels Direct engagement inspections
Engagement Industry surveys,
platforms (e.g. Participation forums and events Thought leadership
Market research Participation in
and brand surveys Intranet, yammer) in consultation Panels and
processes Supplier events
monitoring QBE Ethics Hotline speaking
Roundtables and Feedback surveys engagements
Employee focus focus groups
groups QBE website
Industry forums Briefings and press
releasesQBE Insurance Group Sustainability Report 2018 9
Our memberships and Performance
industry collaboration and reporting
As part of our focus on stakeholder engagement, we By engaging with stakeholders and
are members of, or signatories to, several global and reporting on our sustainability approach
Overview
local sustainability‑related initiatives. These provide us and initiatives, we aim to be transparent and
with a platform to collaborate with stakeholders on key open about our sustainability performance
sustainability issues through open dialogue and knowledge and achievements. Sustainability ratings
sharing. They assist us to develop solutions to address local and industry benchmarks provide an
and global challenges relevant to our industry and beyond. important opportunity for us to improve
our sustainability performance over time.
In 2018 we engaged professional services
insurance
Sustainable
firm Deloitte Touche Tohmatsu (Deloitte)
to work with us to enhance the rigour
A global partnership between the United The peak industry body representing
Nations Environment Programme (UNEP) responsible and ethical investors across behind our sustainability reporting.
and the financial sector. More than 200 Australia and New Zealand. RIAA works to Deloitte conducted independent limited
institutions, including banks, insurers and promote a more responsible approach to
investors, work with UNEP to bring about investment by encouraging more people assurance of our global greenhouse
systemic change in finance to support to actively choose a responsible and ethical gas (GHG) emissions reporting, selected
a sustainable world. option for their savings and investments.
workforce‑related metrics and the total
investments
Responsible
number of Premiums4Good impact
investments and associated financial value
for the year ended 31 December 2018.
The limited assurance statement is available
These provide a global framework for the ClimateWise supports the insurance
insurance industry to address ESG risks industry to better communicate, disclose at the end of this Report.
and opportunities. The initiative aims to and respond to the risks and opportunities
help strengthen the insurance industry’s of climate change. Representing a global In 2019 we will continue to expand
contribution – as risk managers, risk carriers network of leading insurance organisations,
the scope of our assurance over
community
Customer and
and investors – to building resilient, inclusive ClimateWise helps align members’ expertise
and sustainable communities and economies. to directly support society as it responds sustainability‑related metrics.
to climate change.
DISCLOSURE INSIGHT ACTION
The world’s leading proponent of responsible A not‑for‑profit organisation that runs a global
investment. Built around six principles for disclosure system for investors, companies,
We participate in a range of external
reporting and benchmarking
culture
People and
investing responsibly, the PRI are supported cities, states and regions to manage their
by the United Nations. PRI has more than environmental impacts.
2,200 signatories representing more than initiatives including:
US$82 trillion in AUM.
IGCC represents a group of institutional The Australian partner of the World
excellence
Operational
investors with total funds under management Business Council for Sustainable
of $2 trillion, and others in the investment Development. The national peak body
community, who are interested in the impact representing forward‑thinking companies
of climate change on investments. and organisations that are working towards
the transition to a sustainable Australia.
These principles for business offer guidance on how to empower women
DISCLOSURE INSIGHT ACTION
in the workplace, marketplace and community. They are the result of a
Governance
collaboration between the United Nations Entity for Gender Equality and the
Empowerment of Women and the United Nations Global Compact.
9
We also belong to industry bodies and other local
membership organisations in countries where we operate,
as well as forums and institutes related to risk management,
accounting and finance and actuarial services. We encourage
employees to be involved in these organisations through
statement
Assurance
training and qualifications, events, participation in working
groups and taking leadership positions.10
Materiality
In late 2017, we began updating our materiality assessment to identify
the issues, risks and opportunities that are most significant for QBE and
our stakeholders. The results of our materiality assessment inform our
sustainability approach, strategic priorities and reporting.
Identification • Explore – Topics with increasing relevance from
Sustainability topics were identified using an internal perspective and an expected increase
guidance developed by AccountAbility’s AA1000 in stakeholder interest. These topics warrant
AccountAbility Principles (AA1000AP) 2018, further analysis.
including their five‑part materiality test. This
included a review of: Validation
Following the development of the materiality
• media and global peer activities;
matrix by an independent third party, an internal
• a range of sustainability indices such as the Dow
validation workshop was held with the Sustainability
Jones Sustainability Index and MSCI ESG‑indexes;
Committee to test and validate the assumptions
• industry standards and benchmarks such as the
used and the outcomes. This validation took into
Global Reporting Initiative Standards;
account the short, medium and long‑term potential
• the United Nations Sustainable Development Goals;
impacts of each topic. The final outcomes were then
• emerging risks and opportunities for the insurance
shared with the GEC and the Group BRCC.
industry including those outlined in the World
Economic Forum Global Risks Report;
Material topics for 2018
• employee surveys such as QBE Voice;
• stakeholder expectations including feedback Our prioritised material topics for 2018 included:
from investors and customers; and
• targeted stakeholder interviews with
representatives from across the business.
Climate change management
The sustainability topics identified were mapped
As an international insurance company, we have
to our Sustainability Framework to ensure coverage
a significant role to play in understanding and
of the risks and opportunities relevant to our role
managing the potential exposures to climate‑related
in society as an international insurance company.
risks and opportunities across our entire value
chain. This includes transparent disclosure of
Prioritisation
climate‑related financial impacts in line with
The risks and opportunities associated with each
regulatory expectations and the recommendations
sustainability topic were reviewed based on their
of the Financial Stability Board’s Task Force on
importance to our business and to our stakeholders.
Climate‑related Financial Disclosures. As well as the
In addition to the sources reviewed above, a survey
physical impacts of climate change, we are also
of Sustainability Committee members and other
aware of the potential transition risks (e.g. policy,
senior leaders provided input into the analysis of the
technology, market) due to the global shift towards
relative importance of sustainability topics to QBE.
a lower‑carbon economy. Refer to the
Each topic was then positioned on our materiality Spotlight: climate change for more information
matrix within three different stages of relevance on how we are addressing this topic.
and maturity:
• Prioritise – Topics with high importance to both
our stakeholders and our business. These topics
require continuous review and focus. Ethics and conduct
• Maintain – Relevant topics for the business for We are committed to maintaining high ethical
which we have well‑established management standards in how we conduct our business. The
processes. Stakeholder interest in these topics actions and conduct of our employees and others
may vary. acting on QBE’s behalf are key to maintaining theseQBE Insurance Group Sustainability Report 2018 11
standards. Our Group Code of Ethics and Conduct affordable services, efficient and effective resolution
helps guide our employees to act with honesty and of customer complaints and customer education.
integrity, promoting QBE’s reputation and supporting Refer to Customer and community section.
a positive compliance culture. The increased
focus on trust in the financial services sector, with
greater regulatory attention, has led to the need for
enhanced transparency and disclosure around key Quality and transparency of products
customer issues. Refer to Governance section. and services
We are committed to providing high quality
Overview
products and services that account for the risks
being mitigated. Designing products that meet
Culture customers’ needs, provide value, and are responsible
Building a culture that supports and enables us to and reliable is fundamental. This includes providing
achieve our purpose, vision and strategy in an ethical transparent, simple and accurate product and
and responsible manner is a strategic priority for our service information including information related
business. Culture is key to ensuring that how people to pricing, fees and charges. Refer to Customer and
go about their work is seen as just as important community, Sustainable insurance, and Responsible
insurance
Sustainable
as what gets achieved. Our newly defined cultural investments sections.
attributes – being fast paced, accountable, technical
experts, courageous, diverse, customer‑centred and
team‑oriented – help us to deliver on our strategic
plan. Our behaviours and Group Code of Ethics Claims management
and Conduct also underpin our culture. Refer to
As part of our focus on Brilliant Basics (see our
People and culture section.
investments
Responsible
Group CEO’s message in this Report), we are
focused on redesigning our core claims processes
to improve customer experience and reduce
costs. We are committed to responding to clients
Leadership and talent
quickly and ethically in line with our Group Code
Developing and empowering our people to of Ethics and Conduct, and making sure that
be effective leaders and change agents and claims processes are clearly understood. Refer
community
Customer and
building a diverse talent pipeline are core to to Operational excellence section.
developing an effective organisational culture.
This includes developing the appropriate
skills to deliver our strategic priorities. Refer
to People and culture section. Privacy and security
We believe that the security of data and information,
including cyber security, is integral to building
culture
People and
partnerships with our customers in an increasingly
ESG risk management digital economy and workplace. We have a
As an insurance company, our financial strength responsibility to protect customer privacy through
and long‑term sustainability rely on effective the ethical use and control of customer data. We
risk management, including the consideration manage and mitigate emerging threats, including
of economic, political and regulatory risks, as well cyber threats, by adhering to all legislation relevant
as ESG risks. We understand the importance of to our business and our Group Code of Ethics and
excellence
Operational
having a robust ESG risk management framework Conduct. Refer to Operational excellence section.
in place that identifies, assesses and manages
current and emerging risks that are likely to impact
us and our shareholders, customers, partners and
communities. Refer to Sustainable insurance and Appropriate pricing
Responsible investments sections.
We have a strong focus on pricing across our
Governance
business, with detailed assessment of existing
pricing models implemented as part of our
renewed focus on Brilliant Basics. Enabling
Customer service and satisfaction the balance between risk and reward so that
As a customer‑centred business, we engage with our underwriting models appropriately reflect current
customers to understand their current and emerging and emerging risks is important to the continued
needs and to deliver the right products and services. adequacy and appropriateness of our pricing
statement
Assurance
We are focused on continuous improvement models. Refer to Customer and community and
in customer service, providing appropriate and Sustainable insurance sections.12
Our role in the United Nations
Sustainable Development Goals
We believe in, and support, the aims and objectives of the United Nations
Sustainable Development Goals (SDGs) which arose through collaboration
between governments, civil society, the private sector and academia.
The SDGs seek to address the world’s most pressing environmental
and social challenges and form part of a wider 2030 Agenda for
Sustainable Development. At QBE, we are working to align our sustainability
agenda to support advancement of these global goals. As a universal
agreement to work towards a better future, the SDGs align closely with
our own purpose to give people the confidence to achieve their ambitions.
Integrating the SDGs across our In addition to the five goals, our community
global business engagement activities also focus on Goal 3:
Good health and wellbeing. Supporting the health
We reviewed all 17 SDGs to understand their
and wellbeing of our communities is a priority
relevance to our business and stakeholders.
for us from a strategic community engagement
Our assessment considered alignment of the SDGs
perspective. Across our divisions, employees engage
against our purpose, business strategy, sustainability
with their communities via the QBE Foundation
framework, products and services and business
which coordinates charity partnerships, grants,
initiatives, as well as the interconnectedness and
events participation, volunteering, awareness‑raising
interdependencies of the SDGs. We used two
events and employee fundraising.
lenses for this analysis:
We also believe that Goal 17: Partnerships for the
• Direct and indirect impacts of the SDGs on our
goals – underpins everything we do and that
business and stakeholders, including our people,
adherence to that Goal will enable us to help
customers and community.
achieve the wider 2030 Agenda for Sustainable
• Opportunities to contribute to the achievement
Development. We will continue to leverage
of the SDGs through our products and
our existing partnerships to collaborate on key
services, advice, thought leadership and
sustainability topics and will seek to collaborate
community initiatives.
with industry, government, community partners
Following this analysis, we performed a deep and other stakeholders to help achieve the SDGs.
dive review for each division, considering the
Throughout this Report we have included a range
different markets and sectors in which we operate.
of case studies that show how we have contributed
Our divisional analysis considered strategic priorities,
to the SDGs in 2018. We are working with each of our
business activities and product lines. We then
divisions to identify further opportunities to support
engaged with divisional executive teams to review
the SDGs we have prioritised in 2019 and beyond.
and agree key insights. This process validated
our initial thinking and helped identify nuances In addition, building on our work in 2018, we will
to prioritise our efforts at both a divisional and undertake a comprehensive materiality assessment
Group level moving forward. process in 2019 which will further integrate our work
on the SDGs into our business. We believe the SDGs
All of the SDGs are relevant to our business in some
provide a framework to help guide our thinking,
way. However, we contribute to the achievement
identify sustainability leadership opportunities and
of some SDGs more directly than to others.
engage with our stakeholders to collaborate on the
We have therefore chosen to focus our actions on
issues that matter.
five goals (outlined on the following page) which
align most closely to our purpose and strategic
business priorities. This is where we can have the
greatest impact.QBE Insurance Group Sustainability Report 2018 13
Our five priority SDGs
Overview
insurance
Sustainable
investments
Responsible
community
Customer and
GOAL 1: No poverty economic growth. We provide insurance products that
support decent work such as through our workers’
Building the financial resilience of our customers is core
compensation and accident and health solutions.
to our purpose. We protect people and businesses against
A focus on protecting human and labour rights within
risks – contributing to our customers’ long‑term financial
our business and across our supply chain is essential
wellbeing. An accident, illness or natural disaster can
culture
People and
for ensuring QBE remains a responsible employer and
quickly plunge customers into financial distress. Providing
business partner.
insurance protection for customers and communities
helps them to recover, preventing them from falling into,
or deeper into, poverty. GOAL 11: Sustainable cities
and communities
GOAL 5: Gender equality We understand that cities and human settlements are
QBE is committed to gender equality both in terms of our rapidly changing due to increasing urbanisation, changing
excellence
Operational
own people and in the practice of our insurance business. transport and energy systems, building codes and
As a signatory to the Women’s Empowerment Principles exposure to climate risks. We are committed to building
and with our Group CEO as a Male Champion of Change, on our existing data, products, services and advice and
there is a greater strategic focus on diversity and inclusion collaborating with industry and government to identify
across our business. We have committed to promoting sustainable solutions to reduce risk and enhance safety
greater gender equality with a target of 35% women and resilience.
in senior management by 2020.
Governance
GOAL 13: Climate action
GOAL 8: Decent work and As a general insurer, we are very aware of the risks and
economic growth opportunities presented by climate change. We are
well‑positioned to use our industry expertise to help
With operations in key areas and markets internationally,
customers, partners and communities mitigate these risks
enabling sustainable economic growth is fundamental
and support the uptake of opportunities in the transition
to our business. Our strategic focus on innovation and
to a lower‑carbon economy, consistent with the 2015
building for the future enables us to promote sustained
statement
Assurance
Paris Agreement.14
Spotlight: climate change
Climate change is a global risk that by assigning specific responsibilities to the Group
Board and Management. We also created an ESG
has had, and will continue to have,
Risk team to support the CCWG and manage the
ramifications around the world. day‑to‑day implementation of our Climate Change
From physical risks such as flooding, Action Plan. The ESG Risk team also collaborates
droughts and cyclones, at QBE we see with key functions across the business to assess and
monitor our ongoing exposure to climate‑related
first-hand the damaging consequences
risks and identify new opportunities to help our
of the effects of climate change on customers.
people and communities. We are also As an institutional investor, we contribute to a
aware of transition risks, such as those low‑carbon economy by financing renewable
associated with changes in policy, energy infrastructure and investing in green finance
laws, technology, and markets. in both our wider portfolio and through our impact
investment program, Premiums4Good. We provide
Our role as an international insurance and insurance coverage for renewable energy projects
reinsurance company is to give people the globally and will seek further opportunities to do
confidence to achieve their ambitions. This means so in the future.
that we provide customers, communities and people
with the ability to recover from natural catastrophes
and other severe weather‑related events.
QBE accepts the Intergovernmental Panel on Climate change is a significant global risk
Climate Change’s scientific reports and we support and presents challenges and opportunities
the landmark agreement forged at the United for our business and our customers. We are
Nations Framework Convention on Climate Change
supporting our customers in the transition
Conference of the Parties in Paris in 2015, which
to a low carbon economy, consistent
seeks to combat climate change and intensify
with the Paris Agreement, and we are
action and investment in transitioning to a low
carbon future. delivering against our plan to implement the
recommendations of the TCFD, which will
In early 2018, QBE became a signatory to the public
enhance our climate‑related management
Statement of Support for the Financial Stability
and disclosure. We also know that global
Board’s Task Force on Climate‑related Financial
challenges require global solutions, so we
Disclosures (TCFD). The TCFD’s recommendations
are structured around four core elements of how are very pleased to be collaborating closely
companies operate: governance, strategy, risk with our peers in the international insurance
management, and metrics and targets. These industry and through a number of critical
elements establish a strong and consistent international forums.
framework for improving climate‑related risk
management and disclosure.
In 2018, our Climate Change Working Group
(CCWG) undertook a high‑level impact assessment In 2018, we also undertook an analysis of our
of climate‑related risks and opportunities for QBE exposure to coal through the Group’s $23 billion
and our customers over the short, medium and investment portfolio. We identified that we have
longer terms. less than 1% of our total portfolio in coal‑related
assets. In addition, our Group Investments team
Following this analysis, in August 2018, we detailed
initiated dialogue with the largest greenhouse
a plan to implement the recommendations of the
gas emitters in our credit portfolio and with our
TCFD and enhance our disclosure of climate‑related
external investment managers in relation to
risks and opportunities for our business over a
their commitment to implementing the TCFD
three‑year period.
recommendations. More information on this can
In 2018, we reviewed and strengthened our be found in the Climate Change Action Plan section
governance around climate risk management of our 2018 Annual Report.You can also read
