ESG and Compliance

Rising Regulatory Pressures: ESG and Data Privacy Compliance Take Centre Stage

Key Findings

Environmental factors are expected to have the most significant impact on ESG strategies for 58% of UK insurers in the next three to five years.
67% of UK insurers anticipate data privacy and security compliance as a top regulatory challenge for 2025.
53% of global and UK insurers are struggling to keep pace with compliance and regulatory changes.
There is a 22-percentage point increase in UK insurers engaging with claims management partners to support regulatory compliance compared to last year’s results.

ESG criteria shape strategic planning; insurers take a cautious approach

In the face of mounting global challenges to achieving long-term business resilience, UK investors are placing greater emphasis on how companies address their environmental, social and governance (ESG) issues.^[¹^] There is also growing consensus among UK investors that accountability for ESG should rest with the C-suite, implying that insurers and decision-makers need to align their strategies with ESG priorities to navigate this evolving landscape.

Our survey findings show that over half of UK insurers (58%) — and 53% globally — expect environmental factors to have the most significant influence on their ESG strategies over the next three to five years. In the UK, governance considerations rank second at 49%, likely driven by the government’s latest consultation response and draft legislative proposals to regulate ESG rating providers.^[²^] By contrast, global insurers place greater emphasis on social elements (44%) as the next major driver of strategic change.

This variation highlights regional nuances in how ESG priorities are shaping corporate decision-making. As regulatory pressures and investor scrutiny intensify, insurers are adopting cautious, long-term approaches to integrating ESG considerations into their operations.

Shifting regulatory environment: Data privacy remains a key focus area

Organisations in the UK are increasingly driven by heightened scrutiny, and new legislation, data privacy, and security compliance are emerging as top priorities for insurers worldwide. In the UK, 67% of insurers identify data privacy as their leading regulatory challenge for 2025, a trend mirrored globally (70%). This shift reflects the increasing complexity of managing sensitive customer data amid cyber threats and rising expectations for accountability and transparency.

The UK General Data Protection Regulation continues to set a high compliance standard, requiring insurers to embed robust privacy-by-design principles into their data processes.^[³^] Maintaining accountability under these regulations is critical for insurers to mitigate risks and build trust among stakeholders.

“The dynamic nature of these challenges demands continuous monitoring and a flexible, proactive approach to compliance.”

Adding to these pressures is the rapid pace of regulatory change. Over half (53%) of both global and UK insurers report struggling to keep up with shifting compliance requirements, particularly as they vary across jurisdictions and encompass areas such as ESG integration, data protection, and emerging technology risks.

Prioritising external partnerships amid rising compliance demands

The increasingly complex regulatory environment has prompted insurers to collaborate with external specialists to effectively address regulatory challenges and streamline their compliance processes. Globally, 58% of insurers plan to collaborate with law firms or legal advisors to stay abreast of evolving regulations. In the UK, however, compliance consultants are taking centre stage, with 56% of surveyed insurers prioritising their engagement to stay compliant with changing customer-focused regulations.

There is also a notable trend towards insurers partnering with claims management partners to align with customer-centric regulations and streamline operations. Over the past year, this approach has gained traction, with a 22-percentage point increase among UK insurers — and a 13-percentage point globally — reporting plans to leverage such partnerships. These collaborations reflect the growing recognition that regulatory compliance is not just about meeting standards but about enhancing efficiency, reducing risk, and fostering stronger relationships with stakeholders.

As insurers continue to adapt to this evolving landscape, strategic partnerships will remain essential to navigating regulatory complexities while maintaining operational resilience and delivering value to customers.

^[1]“^{PwC’s UK Investor Survey – The economic realities of ESG}^{”, PwC, PDF file, 2021.
[2]“}^{Future regulatory regime for Environmental, Social and Governance (ESG) ratings providers}^{”, HM Treasury, PDF file, November 2024.
[3]“}^{Data protection by design and default}^{”, Information Commissioner’s Office, Updated 04 Sept 2024.}