ESG and Compliance

How Data Privacy Concerns Are Reshaping ESG and Regulatory Compliance

Key Findings

Environmental, social, and governance (ESG) priorities vary regionally, with 53% of global carriers identifying environmental factors as the primary driver of strategy over the next 3-5 years, while in North America, environmental (45%) and governance (43%) concerns are closely ranked, showing a similar impact.
In North America, 69% rank data privacy and security compliance, as their top regulatory challenge.
Over half of carriers globally anticipate difficulties keeping up with compliance and regulatory changes in 2025.
16-percentage point increase from 2024 in North American carriers engaging with claims management partners to support regulatory compliance.

ESG criteria shape strategic planning; carriers take a cautious approach

Institutional investors are increasingly incorporating ESG factors into investment decision-making to manage risks and support sustainable, long-term growth. North American investors are focusing on ESG not only as a responsible investment strategy but also as a safeguard against potential future liabilities.^[¹^] For carriers, this shift has necessitated the consideration of ESG factors in strategic planning, fundamentally reshaping how they approach risk and investment.

Our survey reinforces this through responses from carriers globally, with over half of respondents (53%) anticipating environmental factors to have the most significant impact on their ESG organizational strategies in the coming 3–5 years, compared to social and governance considerations. North American carriers echo a similar sentiment. However, this perspective is shared by only 45% of carriers, indicating a slightly lower prioritization of environmental concerns within ESG frameworks. Interestingly, North American carriers (44%) view the governance aspect to be the next key influence over organizational strategies, while global carriers (44%) place the social element as the second priority.

This could be attributed to the level of regulatory scrutiny and higher risk of shareholder litigation North American businesses face.

Data privacy tops compliance and regulatory challenges

Recent climate disclosure norms in corporate reporting have led organizations to increasingly adapt ESG criteria to their business strategies. Globally, 49% of carriers are enhancing ESG reporting and regulatory compliance processes and integrating them into investment and underwriting decisions to adapt to growing market considerations.

Furthermore, carriers are increasingly viewing data privacy and security compliance as their top regulatory challenge due to the complexities of data management, rising consumer concerns about data protection, and the potential for new federal and state privacy laws. The rapid integration of generative AI technologies raises critical data security issues, as these systems often require access to vast amounts of sensitive information. Concerns about data misuse are escalating, with generative AI potentially leading to unintended exposure or manipulation of confidential data. Our survey shows that a striking 70% of global and 69% of North American carriers anticipate data privacy and security compliance to be their top regulatory challenge in 2025. Ensuring data integrity and privacy will be essential to maintaining trust and compliance with regulatory standards for carriers.

Closely following this is the challenge of keeping pace with evolving compliance requirements. Over half of global respondents (53%) express concerns about the fast-changing regulatory landscape. In North America, cybersecurity and data breach regulations are viewed as the next major compliance hurdle by 56% of respondents, reflecting the region’s focus on mitigating digital vulnerabilities.

Growing reliance on law firms and claims partners for compliance strategy

As regulatory demands grow more complex, carriers are turning to external partners to navigate compliance challenges efficiently. Over half of global respondents (58%) and North American carriers (55%) plan to collaborate with law firms or legal advisors to ensure adherence to evolving regulations.

Notably, carriers are increasingly collaborating with claims management partners to meet customer-focused regulatory requirements. Compared to last year, there is a 13-percentage point increase among global carriers and 16-percentage point increase among North American carriers planning to work with trusted claims management partners. This trend underscores the importance of partnerships in maintaining operational efficiency and customer trust amid rising compliance pressures.

^[1]“^{How North American Investors Are Shaping the Future of ESG}^{”, Center for Sustainability and Excellence, 07 Oct 2024}