The Six Capitals: How Re/Insurers Create Sustainable Value

For a re/insurer, sustainable value creation is about more than generating underwriting profit or investment returns. It is about how the organisation uses and affects the resources, relationships and systems that support its ability to absorb risk over the long term.

The Integrated Reporting Framework describes six forms of capital: financial, manufactured, intellectual, human, social and relationship, and natural capital. These capitals are not static. Through an organisation’s activities, their stocks can increase, decrease or be transformed from one form into another.

For re/insurers, this provides a useful way to think about sustainability.

1. Financial capital

Financial capital includes the funds available to write business, pay claims, invest and grow. A re/insurer creates sustainable value when financial capital is deployed in ways that strengthen long-term resilience—for example through investments in climate-resilient infrastructure, new protection products or improved risk modelling.

Financial capital may decrease initially, but the investment can strengthen other capitals and support future returns.

2. Manufactured capital

Re/insurers own relatively little physical infrastructure compared with many industries, but they insure and invest in significant amounts of manufactured capital. Property, energy infrastructure, transport systems and commercial assets are all exposed to climate and other sustainability risks.

By incorporating resilience into underwriting, pricing and investment decisions, re/insurers can help preserve manufactured capital.

For example, providing incentives for stronger building standards may increase upfront construction costs but reduce future losses and improve the resilience of both insured assets and communities.

3. Intellectual capital

For a re/insurer, intellectual capital is critical.

It includes:

• catastrophe and climate models;

• underwriting expertise;

• claims data;

• proprietary pricing methodologies;

• emerging-risk research; and

• product innovation.

Investment in better climate-risk analytics may reduce financial capital in the short term but increase intellectual capital.

That improved knowledge can support better risk selection, more accurate pricing and new products addressing climate adaptation, renewable energy or emerging protection gaps.

4. Human capital

Insurance remains heavily dependent on specialist judgement. Human capital includes the knowledge, skills, experience and wellbeing of underwriters, actuaries, claims professionals, investment teams and other employees.

Investment in climate science, sustainability, data and emerging-risk capabilities can increase human capital and improve decision-making.

Conversely, failing to develop these skills can reduce an insurer’s capacity to understand rapidly changing risks.

5. Social and relationship capital

Re/insurance depends fundamentally on trust.

Social and relationship capital includes relationships with policyholders, brokers, cedants, regulators, investors, communities and governments.

Paying claims fairly, providing meaningful risk-prevention support and engaging transparently with clients can strengthen this capital.

Poor claims practices, inconsistent underwriting policies or sustainability commitments that are not reflected in business decisions can erode it.

For insurers, this matters because trust underpins the sector’s social licence to operate.

6. Natural capital

Natural capital includes climate stability, ecosystems, water, biodiversity and other environmental resources.

Re/insurers may not directly consume large quantities of natural resources, but they can have significant dependencies and indirect impacts through underwriting and investment portfolios.

They are also financially exposed when natural capital deteriorates. Loss of wetlands, for example, can increase flood exposure. Ecosystem degradation may increase vulnerability to storms, drought or wildfire. Climate change can increase both the frequency and severity of insured losses.

Re/insurers can therefore help preserve natural capital by incorporating nature and climate considerations into underwriting, investment and risk-management decisions.

Seeing sustainable value creation in practice

Consider a re/insurer investing in advanced climate analytics and using the results to develop a resilience-focused property product.

Capital	Potential effect
Financial	↓ Initial investment in modelling and product development; potentially ↑ through improved underwriting and new premium opportunities
Manufactured	↑ Incentives for clients to strengthen physical assets
Intellectual	↑ Better climate data, modelling and underwriting capability
Human	↑ Greater climate-risk expertise among underwriting and risk teams
Social & relationship	↑ Stronger relationships with clients through risk-mitigation support
Natural	↑ Potentially preserved where products encourage nature-based or lower-impact resilience measures

The important point is that the capitals interact. A decision that reduces financial capital today may strengthen intellectual, human or manufactured capital and ultimately improve the insurer’s future financial resilience.

Equally, an insurer can increase short-term financial returns while weakening other capitals, for example by underinvesting in risk expertise, supporting poorly adapted assets or withdrawing capacity without considering wider societal consequences.

What this means for re/insurance

The Six Capitals Framework encourages re/insurers to ask a broader question than “Is this profitable?”

The should instead be: What forms of capital does this decision depend on, which capitals will it strengthen or erode, and what does that mean for our ability to create value over time?

Applied to underwriting, investment, risk management and product development, this approach moves sustainability away from being primarily a reporting exercise.

It becomes a way of thinking about risk, resilience and the long-term role of insurance in the economy and society.