Environmental catastrophes, epidemics and shifting demographics are becoming higher risks to insurers, credit rating agency Moody’s said this week, as the agency sees growing recognition and evolving industry framework for social impact investors. 

“Increasing focus on sustainable finance is shaping insurers’ behavior, and a growing number are implementing ESG-focused strategies in both the investment and insurance underwriting sides of their business, including policies to exclude participation in thermal-coal dependent sectors,” Moody’s Investors Service said.

Among the risks, Moody’s cited the U.S. opioid epidemic boosting disability claims for life insurers, changing regulations and policy measures, climate change and shifting demographics.

“Climate change in particular gives rise to greater uncertainty for insurers,” said Brandan Holmes, a Moody’s senior credit officer. Energy companies transitioning away from carbon-based fuels are creating “stranded assets,” or useless infrastructure, that insurers may be required to pay out on. 

Karma Takeaway: Insurers, always cautious to invest conservatively and preserve their pool of money required to pay out claims, are recognizing a growing trend toward impact investing that has exploded over the past few years.