Sustainability

Alandia taking sustainable insurance seriously

Marina Stenfors, Director Communications at Finnish marine insurer Alandia, explains how the company is leading the way in sustainable insurance through its adoption of the UNEP FI Principles for Sustainable Insurance

Alandia is a Finnish insurance company with a focus on marine, cargo and boat insurance. With more than 80 years of experience the insurer aims to provide superior marine insurance expertise and claims service to its customers by creating long-term relationships in a committed and accountable way.

Headquartered in Aland islands and with offices in Helsinki, Stockholm and Gothenburg Alandia employs approximately 120 professionals.

In spring 2021, Alandia joined the UNEP FI Principles for Sustainable Insurance (PSI) as the second Finnish insurance company.

Launched at the 2012 UN Conference on Sustainable Development, the UNEP FI Principles for Sustainable Insurance (PSI) serve as a global framework for the insurance industry to address environmental, social and governance risks and opportunities. The PSI initiative is the largest collaborative initiative between the UN and the insurance industry.

Pioneering work by the PSI initiative includes the Net-Zero Insurance Alliance, the Sustainable Insurance Facility of the Vulnerable Twenty Group of Finance Ministers (V20), research on nature-positive insurance, development of environmental, social and governance (ESG) guides for insurers.

Thers is also work work supporting the implementation of the recommendations of the Task Force on Climaterelated Financial Disclosures (TCFD) and relevant to emerging frameworks such as the Task Force on Naturerelated Financial Disclosures (TNFD).

WHAT IS SUSTAINABLE INSURANCE?

Sustainable insurance is a strategic approach where all activities in the insurance value chain, including interactions with stakeholders, are done in a responsible and forward-looking way.

This is done by identifying, assessing, managing and monitoring risks and opportunities associated with ESG issues. Sustainable insurance aims to reduce risk, develop innovative solutions, improve business performance and contribute to environmental, social and economic sustainability.

THE FOUR PSI PRINCIPLES

As member of the PSI Alandia has committed to implementing the four PSI Principles. These are designed to embed in the company’s decision-making environmental, social and governance issues relevant to the insurance business, work together with clients and business partners to raise awareness of ESG issues, manage risk and develop solutions and work with governments, regulators and other key stakeholders to promote widespread action across society on ESG matters. It is also designed to demonstrate accountability and transparency by regularly publicly disclosing Alandia’s progress in implementing the Principles.

As a path to implementing the principles, Alandia selected the UN’s sustainability goals that are relevant to

Alandia’s operations. The Alandia management team also carried out a materiality assesment of previously identified ESG issues.

MATERIALITY ANALYSIS

The materiality assesment was carried out from a financial and impact materiality point of view. Alandia assessed what level of impact the issue has on its business success (financial materiality, x-axis) and what level of impact the issue has on ESGissues (impact materiality, y-axis) and prioritized accordingly. During early 2022 the management team started preparing a new company strategy and the work started on implementing the ESG approach based on the materiality assessment. The management team then decided on actions, measurable goals, KPI’s, responsible functions and responsible persons and a follow-up process for the identified ESG issues relevant for Alandia’s business.

THE WAY FORWARD

In June 2022 Alandia published its first UN PSI sustainability report and will continue to do so annually.

The ESG priorities have been communicated as part of the communication of strategy to the personnel and further

ALANDIA ESG APPROACH

1. Proactive loss prevention approach 2. Claims management in a sustainable way 3. Product development 4. Sustainable business conduct in own operations 5. Integrating ESG-issues into risk selection 6. Integrating ESG-issues into responsible investment 7. Selection of reinsurers and intermediates with high ESG reputation 8. Responsible sales, marketing and communications practices 9. Supporting climate change mitigation and environmental initiatives relevant for the marine industry

ESG TOPICS CONTRIBUTING TO ALANDIA’S BUSINESS STRATEGY

LOSS PREVENTION: • Number of customers with active customer projects per year and claims frequency and costs with these customers (BtB) • Number of Loss prevention actions (nbr of reached customer/action) (BtC) CLAIMS MANAGEMENT • Proactive actions in handling claims, correct choices, securing assets, choosing correct suppliers/3rd party partners PRODUCT DEVELOPMENT • Sustainable insurance product and product development • Invest time and efforts in learning new technologies OWN OPERATIONS: • eNPS RISK SELECTION • Including ESG considerations in risk appetite SALES, MARKETING AND COMMUNICATIONS PRACTICES: • NPS (claims, sales) • Brand survey result

ACTIONS RELATED TO THE PSI PRINCIPLES

ESG APPROACH <> PSI PRINCIPLES

1.Proactive loss prevention approach 2.Claims management in a sustainable way 3.Product development 4. Sustainable business conduct in own operations 5.Integrating ESG-issues into risk selection 6. Integrating ESG-issues into responsible investment 7.Selection of reinsurers and intermediates with high ESG reputation 8. Responsible sales, marketing and communications practices 9.Supporting climate change mitigation and environmental initiatives relevant for the marine industry 1.We will embed in our decision making ESG issues relevant to our insurance business. 2. We will work together with our clients and business partners to raise awareness of ESG issues, manage risk and develop solutions 3. We will work together with governments, regulators and other key stakeholders to promote widespread action across society on ESG issues. 4. We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the

Principles.

developed in the business planning process this autumn in all functions.

During the business planning process, the responsible persons and functions defined for implementing the ESG priorities start their work implementing the defined ESG priorities with plans that span three years forward.

The ESG priorities will next be realized and communicated externally to Alandia’s customers, partners, brokers and ship-owners.