The International Insurance Law Association will hold its flagship conference, World Insurance Congress, in Melbourne later this year.

Environmental, social and corporate governance (ESG) and other key topics such as sustainability, disruption and innovation will dominate discussions during the three-day event from August 30 to September 1, in line with the conference’s theme “Insurance Upside Down.”

The Australian Insurance Law Association (AILA), which is hosting the event, says one of the panel sessions will explore the commercial reality of ESG.

“The session promises a robust discussion from broker, insurer, reinsurer and client perspectives on managing the commercial realities of ESG,” AILA says.

ESG panel participant Nigel Jones, Manager Insurance with rail freight operator Aurizon, says ESG requirements can be “challenging”, particularly for organisations involved in the mining sector, or associated supply chains.

Mr Jones says Aurizon’s presentations to potential underwriters for its annual insurance program have “a significant ESG component” and that has taken some of the focus from traditional underwriting.

“Sometimes it’s discriminatory. For example, if you have more than 30% revenue exposure to thermal coal, a lot of insurers won’t provide their capacity.”

Aurizon has been reducing its thermal coal exposure annually and this year it’s at 25% as it grows haulage volumes for future-facing commodities, but Mr Jones says insurers’ targets are likely to keep changing.

“Underwriting a risk on its merits is secondary to the ESG boxes that have to be ticked. Some insurers are probably frustrated by it, too,” he says.

“I’d like to see a line in the sand – currently there’s no certainty with insurers. Next year the thermal coal percentage may change, we don’t know. Potentially there are going to be many clients that will be unable to secure enough insurance capacity.”

Fellow panellist Paul Lacey, Senior Underwriter with Hannover Re, says ESG is well embedded within insurers and reinsurers. “It’s core to what the insurance industry has been doing for a long time.”

Responding to Mr Jones’s call for greater certainty from underwriters, Mr Lacey says “constant dialogue” between insurers, reinsurers, brokers and their clients is needed.

AILA says the conference, held every four years, has only taken place in Australia once, in Sydney in 1994.

The conference will also have sessions on insurance implications from wars and conflicts, climate change and cyber threats.

Click here for registration details.