For us, diversity is ensuring that we have employees with different backgrounds, perspectives and experiences. This brings diversity of thought, which is vital at every level of the business including at Board level.
Hiscox Ltd Board diversity, equity and inclusion policy (PDF)
The Board diversity policy (the policy) sets out the approach to diversity of the Board of Directors of Hiscox Ltd (the Board). The purpose of this policy is to commit to equal opportunities in Board activities and throughout the Company, irrespective of their gender, gender reassignment, sexual orientation, disability, age, religion, beliefs, marital status, social class and race including colour, nationality, ethnic or national origin.
Scope of application
The policy applies to the Board of Hiscox Ltd. Linked to the overall responsibilities of the Board, the policy also extends to oversight of workforce diversity, equity and inclusion throughout the Hiscox Group (the Group) as defined and managed via the Group diversity, equity and inclusion policy1.
Diversity, equity and inclusion as part of the Company strategy
Hiscox operates in a global market and the success of our business is dependent on our people. We want to build teams that are as diverse as the customers and communities we serve and create an environment where all our people can thrive. We want to ensure that being successful at Hiscox is purely down to talent, personal values and effort, and consistent with our values. Our belief is that diverse perspectives and different ways of thinking help us anticipate and meet market needs in new ways. This diversity of thought allows us to look at problems differently, and helps make us more innovative and a stronger partner for our customers.
At Hiscox, diversity is ensuring that we have directors and a workforce2 with different backgrounds, perspectives and experiences. Inclusion is fostering a culture that brings the diversity of thought that is vital at every level of the business including at the Board level, where everyone has a ‘voice’ at the table and everyone’s opinion and views are heard and respected. Diversity, equity and inclusion go hand in hand – an inclusive workplace culture allows diverse employees to have an impact on our business.
We aspire to have a Board that reflects society as a whole. The Board does not feel that it would be appropriate to set quotas as a diverse Board is possible by being mindful of these objectives.
Our commitment (objectives)
The Board will:
1. Ensure a diverse3 and effective Board.
a. At least annually review the structure, size and composition of the Board including the balance of skills, knowledge and experience to assist in the development of a diverse3 pipeline.
b. Annually review Board diversity as part of the Board evaluation process.
c. Ensure the values of the Group promote an open and inclusive environment.
These reviews will normally be facilitated by the Hiscox Ltd Nominations and Governance Committee with recommendations for change made to the Board.
2. Ensure that all appointments and succession plans are considered on merit within the context of strategy requirements and diversity considerations.
a. At least annually review the succession plans for the Board and Senior Management and ensure the talent review process is in place for the wider workforce.
b. Gender and ethnic diversity will be taken into consideration when evaluating the skills, knowledge and experience desirable to fill each role and when considering the methods to attract diverse candidates.
c. A search firm will normally be engaged to assist in the review of the market and they should be committed to addressing gender and/or ethnic diversity.
d. All appointments must be made on merit as aligned to the needs of the Board, the Group, and their strategy and values.
This will normally be facilitated by the Hiscox Ltd Nominations and Governance Committee with recommendations for change made to the Board.
3. Ensure that the overall workforce is diverse and inclusive.
a. Review of the execution of the Group Diversity, Equity and Inclusion Policy4.
This will normally be facilitated by the Hiscox Ltd Nominations and Governance Committee with recommendations for change made to the Board.
b. Ongoing Board and Committee review of matters relating to employee retention, engagement and culture.
Review of the policy
The Nominations and Governance Committee shall review the policy annually. This review will include an assessment of the effectiveness of the policy and recommend any revisions to the Board for approval.
2. All Hiscox employees, regardless of position or status, and to contractors and sub-contractors.
3. Diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.
We want to build teams that are as diverse as the customers and communities we serve and create an environment where all our people can thrive.
Group diversity, equity and inclusion policy (PDF)
- Purpose of the Policy
The purpose of this policy is to set out Hiscox’s approach to diversity, equity and inclusion (DEI) across the Hiscox Group (“Hiscox”). Consideration has been given in the drafting of this policy where appropriate to law and regulation in all relevant jurisdictions where Hiscox conducts business. It does not form part of any terms and conditions of employment and Hiscox may amend at its sole discretion at any time.
Hiscox will at all times adhere to local law and regulation and in case of conflict, local law shall prevail.
- Target audience
This policy applies to all Hiscox employees, regardless of position or status. The policy is approved by the Hiscox Ltd Board and adopted by the subsidiary Boards. This policy is for internal use only and should not be shared outside of Hiscox unless express permission has been given by the Policy Owner.
The policy is applicable across all Hiscox business units and companies.
- Review Process
The annual review of the policy is completed by the Policy Owner. Any material changes are presented to the Policy Approver for approval, with minor changes being approved by the Policy Owner.
Diversity, Equity and Inclusion
- Diversity, Equity and Inclusion Principles
Hiscox operates in a global market and the success of our business is dependent on our people. Our human capital is our most valuable asset. The collective sum of the individual differences, life experiences, knowledge, innovation, self-expression, unique capabilities and talent that our employees invest in their work represents a significant part of our culture, reputation and achievement.
We want to ensure that being successful at Hiscox is a result of talent, personal values and effort, consistent with our values. Our belief is that diverse and inclusive teams help us anticipate and meet market needs in new ways, improve decision making and develop resilience. We also believe diversity, equity and inclusion enables us to better understand our clients, provide sustainable value, attract the best talent in the market and increase employee engagement, productivity, retention and innovation therefore making Hiscox a stronger partner for our customers.
At Hiscox, diversity is building a workforce that reflects the makeup of our customers, the communities we serve, and the communities in which we live and work and ensuring that we have employees with different backgrounds, perspectives and experiences. Inclusion is fostering a workplace culture where everyone is involved, treated fairly, knows they are respected, heard and valued, feels a deep sense of belonging, and can thrive. Equality is equal access to opportunity, advancement, support and reward, while employee equity is the removal of the behavioural and structural barriers that allow us to achieve equality. Diversity, equity and inclusion, go hand in hand – without an inclusive and equitable workplace culture, diversity amongst employees will not have the desired positive impact on our business.
At Hiscox, we want to provide equal opportunities to all in employment, irrespective of their sex, gender, gender identity, sexual orientation, ancestry, disability, age, religion, beliefs, marital status, military service, veteran status, genetic information, social class and race including colour, nationality, citizenship status, ethnic and/or national origin.
- Our commitment
- To build a workforce that reflects the diversity of the customers and communities we serve, and the communities in which we live and work.
- To create an environment where all our people can thrive.
- To ensure that being successful at Hiscox is purely down to talent, personal values and effort, consistent with our value of being human: clear, fair and inclusive.
- To embrace and value individuals’ visible and non-visible differences.
- To remove behavioural and structural barriers to equality.
- To create an environment and culture where employees have the support to make decisions, find solutions, take risks and learn, and all take ownership to lead progress in diversity, equity and inclusion.
- To ensure all employees feel heard, valued, engaged and respected.
- To build a culture with psychological safety for all.
- To recognise and invest in the value that a diverse workforce can bring.
- To challenge and investigate discriminatory behaviour and enforce the disciplinary procedure, when this is considered necessary.
- To proactively address any inappropriate behaviours.
We are committed to promoting equality of opportunity, providing an inclusive workplace and eliminating any unfair or unlawful discrimination in all areas of our business. DEI goals and plans to achieve those goals are set at the local business level. These plans are monitored centrally and also via specific local reports to subsidiary Boards. This approach is supported by an annual report on DEI to the Hiscox Ltd Board. We will continue to review our current systems and processes to seek opportunities to improve our DEI data collection and practices in order to progress and achieve our DEI vision. This includes considerations of our employment policies and practices relating to (but not limited to):
- recruitment and selection;
- terms and conditions of employment;
- working environment;
- training and development;
- promotion and career progression;
- flexible working;
- compensation and benefits;
- grievance and harassment;
- redundancy and re-deployment;
In accordance with applicable privacy regulations and an appropriate lawful basis, Hiscox will regularly collect, monitor and analyse available diversity data on employees and job applicants, and will publicly disclose aggregate data as appropriate, to ensure our employment processes are fair and achieving the aims of this policy. We will also monitor compensation in regard to gender and other under- represented groups, and look to broaden (where legally permitted) and include DEI questions within our annual employee engagement survey.
All the information we collect will be held in the strictest confidence and will only be used to illustrate and promote equality, diversity and inclusion and prevent unlawful discrimination.
We will ensure appropriate governance and oversight to confirm that we are adhering to the provisions of this policy, including internal and external party reviews. While this policy is owned by the Global Head of Diversity, Equity and Inclusion, it is overseen by the Hiscox Ltd Board and aligned to the Board Diversity and Inclusion Policy.
Equality policy statement (PDF)
Hiscox equality policy
The purpose of this policy to provide equal opportunities to all in employment, irrespective of their gender, race, disability, age, sexuality, religion, beliefs, marital status and social class. Hiscox strongly opposes all forms of unlawful and unfair discrimination.
- Every employee is entitled to a working environment which promotes dignity and respect to all. No form of intimidation, bullying or harassment will be tolerated.
- The commitment to equal opportunities in the workplace is good management practice and makes sound business sense.
- Breaches of our equal opportunity policy will be regarded as misconduct under the terms of our disciplinary process. A severe breach could constitute gross misconduct.
- This policy is fully supported by senior management.
- The policy will be monitored and reviewed annually.
What is the Equality Act 2010?
From 1 October 2010, the Equality Act came into force which aims to simplify, reform and harmonise the UK’s discrimination regime. The Act supersedes all previous acts and legislation namely the Equal Pay Act 1970, Sex Discrimination Act 1975, Race Relations Act 1976, Disability Discrimination Act 1995, Equality Act 2006, Employment Equality (religion or belief) Regulations Act 2003, Employment Equality (sexual orientation) Regulations 2003, Employment Equality (Age) Regulations 2006 and Equality Act (sexual orientation) Regulations 2007.
The act protects the following groups from discrimination which are known as “protected characteristics”:
- Gender reassignment
- Marriage and civil partnership
- Pregnancy and maternity
- Race including colour, nationality, ethnic or national origin
- Religion or beliefs
- Sexual orientation
What is discrimination under the Act?
Discrimination can only take place in connection with the protected characteristics. A particular event could give rise to one or more type of discrimination.
The main types of discrimination are:
Direct discrimination – this happens where someone is treated less favourably than another because they have a protected characteristic or they are perceived to have a protected characteristic.
Associative discrimination – this applies to the following protected characteristics: race, religion or belief, sexual orientation, age, disability, gender reassignment and sex. This happens where someone is treated less favourably because they associate with another person who possesses a protected characteristic.
Perceived discrimination – this applies to the following protected characteristics: race, religion or belief, sexual orientation, age, disability, gender reassignment and sex. This happens where someone is treated less favourably because they are perceived to have a protected characteristic. This applies even if the person does not have the protected characteristic.
Indirect discrimination – this applies to the following protected characteristics: race, religion or belief, sexual orientation, age, disability, gender reassignment and sex. This happens where there is a condition, rule, policy or practice that applies equally to everyone but has the effect of being disadvantageous to a particular group who share a protected characteristic.
Harassment – this is unwanted conduct related to a relevant protected characteristic, which has the purpose or effect of violating an individual’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that individual. Employees can complain of behaviour they find offensive, humiliating etc even if not directed to them and they need not have a protected characteristic themselves.
Victimisation – this applies to all protected characteristics and happens when an employee is treated less favourably because they have made or supported a complaint or raised a grievance under the Act or they are expected to do so.
What do I do if I feel I have been discriminated against?
Hiscox employees should raise any concerns regarding discrimination of any kind with their manager or a member of the HR Team. Any allegation of discrimination should be made via the company's grievance procedure.
We want everyone, both within the company and externally, when they have contact with Hiscox, to feel that they are dealing with a decent organisation which lives its values. Harassment, bullying and discrimination of any kind have no place at Hiscox.
Grievance procedure and whistleblowing policy (PDF)
We want everyone, both within the company and externally, when they have contact with Hiscox, to feel that they are dealing with a decent organisation which lives its values. Harassment, bullying and discrimination of any kind have no place at Hiscox.
We have an employee conduct philosophy to ensure all our staff know what is expected of them, and a harassment and bullying policy that makes clear it is incumbent on all of us to behave in a manner which is not offensive to others. These are supported by local HR policies and handbooks.
Where problems arise during the course of employment, our aim is for them to be aired and, where possible, resolved quickly and to the satisfaction of all concerned. If this cannot be achieved using an informal route, which may be by raising it with your line manager in the first instance, then we have a fair and equitable grievance process through which action can be taken if necessary. We take this process very seriously and follow it in every case.
We also have a whistleblowing policy which commits Hiscox to ensuring that an employee will suffer no retaliation or detrimental treatment as a result of raising a genuine concern about mistreatment or malpractice. This policy ensure that employees feel empowered to raise concerns in confidence and without fear of unfair treatment.
Whistleblowing concerns may be raised through a number of different channels; line management; senior management; Head of Group Internal Audit; whistleblowers’ champions or other Non Executive Directors; and externally.
The structures and processes we have in place allows for the proportionate and independent investigation of any such matters, and for appropriate follow-up action to be taken where necessary. Hiscox is committed to dealing responsibly, openly and professionally with any genuine concern about wrongdoing, malpractice or a safety risk in the workplace. As such, any evidence that an individual has acted to the detriment of a whistleblower will be taken extremely seriously.
The Board and the Audit Committee – whose Chair also who serves as a whistleblowing champion – has oversight of whistleblowing and routinely receives reports arising from its operation.
In addition, all Hiscox employees worldwide can access free, confidential advice from Protect, which as an independent charity can provide impartial advice and help with advice on how to proceed in raising a concern.
Hiscox is committed to ensuring that we comply with the provisions of the Modern Slavery Act. As such, we take a zero-tolerance approach to slavery or human trafficking in our supply chains or in any part of our business.
Our policies differ by country. Here you’ll find our parental leave policies (maternity, paternity, parental leave and adoption leave) across the Group.
Financial and regulatory
Integrity is one of the Hiscox values, and fundamental to this is honest and fair dealing in all activities throughout the Hiscox Group. Hiscox’s anti-bribery and corruption policy is set out within the broader Hiscox Group financial crime policy, which establishes the approach, principles and requirements to comply with relevant laws and regulations, and to minimise the risk of Hiscox becoming associated with such criminal activities.
Anti-bribery and corruption policy (PDF)
Integrity is one of the Hiscox values, and fundamental to this is honest and fair dealing in all activities throughout the Hiscox Group.
Hiscox’s anti-bribery and corruption policy is set out within the broader Hiscox Group financial crime policy, which establishes the approach, principles and requirements to comply with relevant laws and regulations, and to minimise the risk of Hiscox becoming associated with such criminal activities.
This policy applies to all Hiscox business units and subsidiaries, as well as to all employees, officers, contractors, interns, casual workers and agency workers (‘Hiscox staff’).
All Hiscox staff must ensure that they do not engage in any activity which breaches bribery and corruption laws or regulations. To facilitate understanding this is described broadly as:
- minimising offering, promising, giving or accepting something in exchange for inducing improper conduct on the part of someone else, either directly or indirectly;
- abusing a position of trust or power, to gain an improper advantage; and
- offering or accepting any illegal facilitation payments or ‘kickbacks’.
Hiscox staff must report any concerns of this nature as soon as they become aware of them, and may do so via their line manager or a member of the compliance team. The policy also refers staff to Hiscox’s whistleblowing policy and procedures, which provide alternative means of escalation should staff feel unable to report concerns through the usual channels for any reason.
Hiscox is also committed to ensuring that all staff are appropriately trained on this issue. At a minimum, all Hiscox staff must complete mandatory training, including anti-bribery and corruption training, when they join Hiscox, with further refresher training on the subject completed annually.
Hiscox’s anti-bribery and corruption policy complements, and is supported by, a host of other policies including a conflicts of interest policy, gifts and entertainments policy, and Group broker remuneration policy. For example, the Group’s gifts and entertainments policy confirms that it is the policy of Hiscox Group not to make political donations, which we consider to include any gift, loan or deposit given to a political party.
The Group Risk and Capital Committee is responsible for oversight of the Group’s anti-bribery and corruption risk approach as part of its broader remit over financial crime, and reports up to the Risk Committee of the Board.
The Foreign Account Tax Compliance Act (‘FATCA’) is US law designed to prevent US taxpayers from hiding their taxable income offshore.
Effective 1 July 2014, this new law requires US brokers and other withholding agents to check the status of their counterparties when making certain payments (including certain (re)insurance premium payments), in order to ensure the transaction will not – whether inadvertently or intentionally – result in the payment of undeclared US taxable income. Companies and other non-natural entities are encouraged to use IRS Form W-8BEN-E to provide evidence of their FATCA status.
Hiscox is therefore making these forms available for those of its insurance carriers which may be in receipt of US-sourced insurance premiums.
Should you have any queries, please contact:
In Bermuda: An-Wanae Butterfield
+1 441 278 8386
In the UK: Clare Murray
+44 (0)20 7448 6000
In the US: Ron Lemp
+1 914 273 7468
Hiscox is committed to maintaining a culture of integrity, transparency and accountability to ensure compliance with all applicable financial crime laws and regulations.
Financial crime statement (PDF)
One of Hiscox’s values is integrity. We are committed to maintaining an open culture which ensures transparency and accountability, and allows us to comply with all applicable laws and regulations designed to combat financial crime. Hiscox has a robust set of systems and controls which have been created to ensure that we manage the risk of financial crime appropriately. These are implemented in-line with the Group’s financial crime policy, which was last approved by the Hiscox Ltd board in July 2020.
The policy covers the following areas:
- bribery and corruption;
- terrorist financing;
- money laundering;
- facilitation of tax evasion; and
Bribery and corruption
The policy sets out the Group’s zero-tolerance approach to bribery and corruption, including so-called facilitation payments, and describes the implications for broker remuneration, gifts and entertainment, and recruitment. It also includes definitions and examples of both bribery and corruption in order to facilitate understanding.
The policy sets out the different types of sanctions that could apply to the Hiscox Group or its clients, the customer due diligence steps that need to be taken (including enhanced steps for higher-risk jurisdictions), the approach to claims payments, underwriting steps to be taken to ensure sanctions compliance, and controls which need to be exercised over delegated authority underwriting and claims handling.
Terrorist financing, money laundering and tax evasion
The policy highlights the main risks to the business from these types of suspicious activities, and how they can be linked to each other. It also sets out the principal obligations on our people to deal with these risks, and steps to be taken for the reporting of suspicious transactions.
The policy describes the different types of fraud (both internal and external) to which the Group is exposed, and steps business areas should take in order to protect both the company’s and its customers’ assets. The policy includes broader obligations for staff on issues such as customer due diligence, and the avoidance of tipping-off, which cut across a number of different financial crime types. Financial crime is embedded in the Group’s wider enterprise risk management framework, with regular risk and control assessments across the business, with reporting to risk committees and boards. The policy is underpinned by an annual training programme on all aspects financial crime, completion of which is mandatory for all staff, along with targeted training for specific higher-risk groups of staff. The financial crime policy complements separate arrangements in place for the avoidance of conflicts of interest, insider trading, and whistleblowing.
Hiscox has a responsible approach to tax. We pay the right amount of tax in every operating location, while creating sustainable value for the benefit of the shareholders. We strive to act responsibly by complying with all relevant legislation, meeting all compliance and reporting obligations. We operate in an open and transparent manner with the tax authorities in every jurisdiction. We plan to be efficient with our tax affairs, but tax mitigation is not a driver for activity. The purpose of our tax strategy is to communicate the policy for the management of tax risk within the Hiscox Group.
1.1 Overview of the Group
Hiscox is a global specialist insurer, headquartered in Bermuda and listed on the London Stock Exchange. We can trace our roots in the Lloyd’s market back to 1901 and our adaptability has meant we have evolved organically over time. Today, Hiscox employs over 3,000 people across 14 jurisdictions with customers and business partners across the Globe. As a business we pay taxes in all the jurisdictions in which we operate: including corporate income taxes, payroll and related employment taxes, business property taxes, and sales and other indirect taxes. We are domiciled in Bermuda for three reasons: its position as a global reinsurance centre, its stable regulatory environment, and its favourable tax environment. The regulatory and strategic rationale for locating in Bermuda are the overwhelming factors in this decision. The Hiscox Group is regulated by the Bermuda Monetary Authority (BMA), under the Bermuda Group Supervisory Framework. The Bermudian reinsurance market is one of the largest in the world with annual gross written premiums in 2021 of $128 billion1 . Bermuda’s insurance regime has also been recognised as equivalent to Solvency II. Hiscox has a UK listing as we believe the London Stock Exchange is a good place for our shares to be traded. It has a strong reputation, deep liquidity and capital market with good insurance expertise. This tax strategy summarises our approach to ensuring that we pay the correct amount of tax in all the jurisdictions in which we operate.
1 Source: Association of Bermuda Insurers and Reinsurers.
1.2 Review, communication and publication
Ultimate responsibility and ownership of this tax strategy resides with the Board of Hiscox Ltd. It is reviewed and updated annually for approval by the Board. Board approval is sought in respect of any amendments to this document. Periodic reviews of the tax strategy are undertaken to assess the appropriateness of the strategy and to ensure tax risk controls and monitoring activities are conducted as documented. This strategy is effective from 1 January 2023.
1.3 Applicability to UK sub-group
The UK has introduced specific legislation which requires the Group to publish certain information about our tax strategy as it is relevant to the management of UK taxes by our UK subsidiaries. Under paragraph 19(2), Schedule 19, Finance Act 2016, there is a requirement that the UK Sub-Group must prepare and publish a sub-group tax strategy, containing the information required by paragraph 20, in accordance with this paragraph. Hiscox considers that the publication of this tax strategy meets the requirements imposed on its UK subsidiaries by Schedule 19 of Finance Act 2016.
1.4 Risk management
The Group’s core business is to take risk where it is adequately rewarded, guided by a strategy that aims to maximise return on equity within a defined risk appetite. The Group’s success is dependent on how well we understand and manage our exposures to principal risks. The Group’s appetite for risk is set by the Board and is aligned to the strategic objectives of the Group. The Group takes an enterprise-wide approach to managing risk. The risk management framework provides a controlled system for identifying, measuring, managing, monitoring and reporting risk across the Group. Exposures are monitored and evaluated both within the business units and at Group level to assess the overall level of risk being taken and the mitigation approaches being used. We consider how different exposures and risk types interact, and whether these may result in correlations, concentrations or dependencies. The objective is to optimise risk-return decision-making while managing total exposure, and in doing so remain within the parameters set by the Board. The risk management framework is underpinned by a system of internal control, which provides a proportionate and consistent system for designing, implementing, operating and assessing how we manage our key risks. This framework is regularly reviewed and enhanced to reflect evolving practice on risk management and governance. More information on the Group’s approach to risk management can be found in the annual Report and Accounts.
1.5 Tax objectives and acceptable level of tax risk
The Group is subject to income taxes levied by the various jurisdictions in which we operate. The division of taxing rights between these jurisdictions determines the effective rate of income tax which applies to the Group. We comply with legal requirements in the taxing jurisdictions in which we operate, in a manner that ensures we pay the right amount of tax while creating sustainable value for the benefit of the shareholders. This approach is underpinned by an open and transparent relationship with the tax authorities in these jurisdictions.
2. Governance of tax and tax risk
2.1 Policy oversight
The Group CFO has responsibility for tax at Board level. This includes communicating and advising the Board on the tax affairs and risks of the Group to ensure:
- the proper control and management of tax risk;
- the Group’s tax position is planned in line with the Group’s strategic objectives; and,
- the Group’s tax charge is appropriately stated in the statutory accounts and tax returns.
2.2 Policy principles
The Board has established that the following principles will form the basis of the tax management philosophy and policy of the Group.
Overall approach to tax
Hiscox strives to act responsibly by being compliant with all relevant legislation, meeting all compliance and reporting obligations in the jurisdictions in which we operate.
Risk and internal control
Hiscox manages tax in line with the Group’s governance framework and procedures (see section 1.4 above for further details). The Group has put in place a network of internal controls designed to respond effectively to emerging and existing tax risks, and to manage risk effectively within the parameters set by the Board. Where such processes and controls are found to be ineffective, remediation steps are taken on a timely basis.
Hiscox ensures there is a strategy in place that enables the Group to manage tax risks arising from changes in legislation or the business operations.
The Hiscox Group aims to be efficient in its tax affairs but tax mitigation is not a driver for activity. Tax planning opportunities arising from significant commercial transactions will be considered by the Board to ensure a beneficial post-tax result of any transaction.
2.3 Key controls
Hiscox has established key controls to manage the risk of incorrect tax accounting and reporting in keeping with the overall risk management framework. The fulfilment of these is documented, whether in tax returns, working papers or other internal documents.
This process and control documentation are subject to a program of ongoing improvement, including relevant changes to the underlying processes or when new risks are identified.
The key controls are monitored to ensure that:
- governance processes are such that the Board and Audit Committee have oversight of high risk and material transactions/processes;
- tax processes and controls operate effectively;
- remediation processes are put in place to address ineffective or inadequate controls.
2.4 Internal audit
The role of Hiscox Internal Audit function is to provide independent assurance that the Group’s risk management, governance and internal control processes, including the above mentioned key controls, are operating effectively and in line with the Group’s strategic objectives. Internal Audit reports directly to the Group Audit Committee as a means of ensuring their independence and objectivity.
3. Roles and responsibilities
Hiscox ensures it has sufficient resource with the appropriate skills and experience to meet its filing and reporting obligations and manage tax risk appropriately. External advice is sought in respect of significant transactions and material risks or where the required expertise cannot be sourced in-house. Ultimate responsibility for tax resides with the Board. The Board has delegated this responsibility to the Group CFO who reports to the Board as required. Process owners within the business are nonetheless responsible and accountable for meeting the tax obligations, controls and policies and reporting to the Board for their respective functions.
This segregation of responsibilities enables the Group to operate a three lines of defence model in respect of tax risk:
- individual risk owners – those individuals that manage the tax risk on a day-to-day basis;
- oversight of risk – the Group’s Risk Committee provides challenge and support to those individual risk owners;
- independent assurance – both internal and external audit ensure that tax risks are being managed in line with policy and process in place.
The finance function is the main process owner responsible for all taxes within the Group. With regards to tax, the finance function’s key objectives are:
- ensuring compliance with relevant laws and filing obligations across the Group in the jurisdictions in which we operate;
- ensuring that Hiscox’s reputation is not adversely impacted by the way it manages and monitors its tax risk within the Group;
- maintaining an open and co-operative relationship with tax authorities wherever possible;
- ensuring that taxes (and tax risks) are managed to provide sustainable outcomes, within the parameters of the Group’s strategic and commercial objectives;
- ensuring any tax planning opportunities arise from commercial and economic activity and are undertaken within the remit of the relevant applicable law.
4. Relationship with tax authorities
The Group maintains an open, transparent and co-operative relationship with tax authorities and seeks to work in collaboration with them in relation to its tax affairs:
- in the event of an error arising in a tax return, full and unprompted disclosure, where foreseen by law is made to the relevant tax authority;
- the Group discloses any relevant planning it undertakes to the relevant tax authority in line with the disclosure requirements and criteria set out by the relevant legislation; and
- the Group seeks active cooperation with tax authorities in respect of current, future and retrospective tax risks, events and interpretation of the law across all relevant taxes and duties, to facilitate relationships of trust.
5. Tax planning
Timely and accurate consideration of the tax consequences, both risks and opportunities, arising from business transactions is key to effective tax management. The Hiscox Group plans to be efficient with its tax affairs, but tax mitigation is not a driver for activity. Tax planning opportunities arising from significant commercial transactions will be considered by the Board. Any tax planning to be considered by the Board must be supported by an appropriate level of tax analysis. The appropriate level of tax analysis will vary depending on the level of associated tax risk and materiality to the Group. In addition to the principles outlined in section 2.2 the following considerations are used to determine the appropriateness of tax planning risk:
- reputational impact;
- strength of tax advisors’ opinion;
- impact on cash flow;
- impact on financial accounts.
Hiscox is required by the UK’s Prudential Regulation Authority (PRA) to submit a Solvency and Financial Condition Report (SFCR) in accordance with the Solvency II Directive. This provides stakeholders with additional information over and above that contained in our annual financial statements.
Hiscox Insurance Company Solvency and Financial Condition Report
The Bermuda Monetary Authority (BMA) requires Bermudian insurers to publish annually a Financial Condition Report (FCR). The purpose of the FCR is to provide stakeholders, including policyholders, regulators and shareholders with additional information on the financial condition of the insurer over and above that contained in the annual financial statements.
The legal process for the proposed merger of Hiscox Europe Underwriting Limited (HEUL) into Hiscox SA (HSA), both of which are part of the Hiscox Group, is underway and as such we have published the HEUL Directors’ Report concerning the merger:
Health, safety, security and environment
Our health and safety policy is to provide across all Hiscox Group activities and locations, and in as far as is reasonably practicable, a work environment and work activities that together ensure the health, safety and welfare of all our employees and those who are affected by our operations.
Group health and safety policy (PDF)
Hiscox is a leader in specialist insurance. We seek to provide the best protection and peace of mind for our clients through high-quality insurance products, backed with excellent service. We aspire for a reputation of integrity and quality.
It is our policy to provide, across all Group activities and in as far as is reasonably practicable, a work environment and work activities that together ensure the health, safety and welfare of all our employees and those who are affected by our operations, wherever they are undertaken.
This health and safety policy sets out the standards we aim to achieve throughout Hiscox Group activities. We commit to organising these in compliance with relevant health and safety legislation and regulation and other requirements.
We recognise that ultimate responsibility for health and safety management and health and safety performance within Hiscox Group activities rests with the Executive Directors. Their management teams are responsible for organising activities with due regard for health and safety and in doing so, it will be their objective to meet and where possible exceed statutory requirements, especially with regards to those issues most relevant to our employees. Our management teams are committed to introducing and maintaining the necessary organisation and arrangements to achieve this objective.
The health and safety management system comprises a number of documents which explain more fully how Hiscox organises its activities to achieve a high standard of health and safety. Within this framework, we commit to:
- provide appropriate health and safety training, guidance and information to all Hiscox employees;
- develop and maintain fire risk assessment for each Hiscox premises;
- support the creation and maintenance of a building emergency plan for each Hiscox premises;
- organise the provision of and maintenance of safe and compliant furniture and computer equipment;
- monitor, measure, audit and report on health and safety performance, and set objectives and targets with the aim of achieving continual improvement;
- review and revise health and safety documents in light of legislative or organisational changes within Hiscox.
In addition to the health and safety arrangements put in place by Hiscox, all Group employees will have legal responsibilities to take reasonable care of their own health and safety at work and co-operate with Company arrangements. Documents comprising the health and safety management system are accessible on the Hiscox intranet, or as a hard copy on request.
Hiscox is committed to protecting the confidentiality, integrity and availability of the data it holds, with an effective Information Security Management System (ISMS) and robust information security controls.
Information security statement (PDF)
Hiscox is committed to protecting the confidentiality, integrity and availability of the data it holds. We have an effective information security management system (ISMS), built on the fundamental pillars of people, processes and technology, as well as robust information security controls which are aligned to globally recognised industry standards.
Our Group-wide cyber security policy sets out the ISMS in operation at Hiscox. All information security policies apply across the Hiscox Group and are accessible to all staff, including any third-party workers with access to our network. These are reviewed and approved on an annual basis to ensure they remain accurate and appropriate.
Hiscox deploys various protective measures to protect its network and systems from threats and utilises third-party security expertise wherever we believe that doing so will enhance our existing security capabilities. Access to our network and systems is well controlled and closely monitored, ensuring the principle of least privilege is applied.
We take staff training seriously and conduct information security-related training and awareness activities throughout the year, including all-staff computer-based training at least twice per year (including any third-party workers with access to our network), regular staff phishing exercises and Group-wide communications on information security matters. In addition, Hiscox Board members and those in higher-risk roles are subject to more focused in-house security training.
We also expect all third parties who deal with Hiscox to operate in line with our data protection standards, and to treat our customer and employee personal data with the highest level of care. We operate a Group-wide privacy and information security third-party assurance framework, to ensure our requirements are being met, which covers both due diligence of third parties at the point of on-boarding and ongoing assurance. This is achieved through periodic reviews and/or audits of third-party processes and controls.
Information security-related audits are conducted by an independent internal audit team operating as the third line of defence within Hiscox’s ‘three lines of defence’ risk management model. The scope of these audits varies in nature and forms part of an annual risk-based audit plan. Audits are also periodically performed by external auditors.
Our environmental policy sets out the standards we aim to achieve throughout Hiscox Group activities.
Environmental policy (PDF)
Hiscox has a responsible approach to managing the environmental impact of our business activities and those that arise from our ownership and occupation of office premises. We actively manage and aim to minimise our environmental impacts (due to the resources we consume and amount of waste our activities produce), as well as to comply with relevant environmental legislation and other requirements. This environmental policy sets out how we will achieve our aims throughout the Hiscox Group. We will do this by:
- investing in research to better understand the risks associated with climate change and changing weather patterns and incorporating the results into our insurance products and services;
- minimising our climate change impacts by purchasing, where possible and appropriate, energy from renewable sources;
- routinely measuring and recording the amount of energy, water and office consumables used in Hiscox office premises, and setting objectives and targets with the aim to reduce consumption;
- operating waste management systems that implement the waste hierarchy (improving resource efficiency first in order to prevent/reduce waste) and promote the recovery and/or recycling of as much waste as possible;
- sourcing, wherever possible, consumables from sustainable sources;
- operating a programme to replace air conditioning gases with environmentally-preferable alternatives;
- minimising the impact of our business-related travel (domestic and international), wherever practicable;
- favouring, where appropriate, the purchase and use of energy efficient office equipment and communications systems;
- encouraging awareness of local and global environmental issues within our business, and individual responsibility amongst our employees and supporting them in completing appropriate environmental initiatives within their communities;
- involving others in the development of our environmental strategy, for example we expect our asset managers to invest in companies that have sound environmental, social and governance practices;
- monitoring, measuring, auditing and reporting on our environmental performance, including setting targets and objectives to drive continual improvement over time and demonstrate good performance on these issues;
- offsetting our unavoidable greenhouse emissions through carbon offset projects that have been verified against international standards;
- providing adequate and appropriate resources to implement this policy and ensuring that all stakeholders are aware of it, as well as their role in achieving the commitments.
In addition to the health and safety arrangements put in place by Hiscox, all Group employees will have legal responsibilities to take reasonable care of their own health and safety at work and co-operate with Company arrangements. We review this policy on a regular basis to ensure it continues to be relevant and adhere to legal and regulatory obligations.
Hiscox is committed to protecting your privacy and we set out clearly the information that we may collect from you and how we may use that information.
Investment and ESG policies
At Hiscox, we have a clear and defined set of values which underpin everything we do and serves to highlight our commitment to conducting business in a socially-responsible way. This approach extends to our supplier relationships, which is why we have put in place a code of conduct for our suppliers.
Supplier Code of Conduct (PDF)
At Hiscox, we endeavor to give people and businesses the confidence to realise their ambitions. Our core values that underpin everything we do help us achieve this purpose by connecting us to the business, our customers, our suppliers and each other in an ethical, socially responsible way.
We want to work with like-minded businesses who align with our values and support our goals. This Code of Conduct sets out the behaviours and standards we expect from a) all suppliers providing goods and services to or on behalf of Hiscox and b) any third parties subcontracted by our suppliers. Any supplier that has any commercial dealings with Hiscox, including brokers, coverholders, third-party administrators, outsourced service providers and specialists, and any of their subcontractors must state compliance with this Code of Conduct.
Integrity is one of Hiscox’s core values. Fundamental to this is honest and fair dealing in all activities throughout the Hiscox Group and our supply chains. Our suppliers must adhere rigorously to applicable legislation and regulations, both in letter and in spirit, in all jurisdictions in which they operate. In particular, we expect them:
- to maintain an anti-bribery and corruption policy and abide by all relevant legislation;
- not to commit any form of fraud, money laundering, tax evasion, market abuse, sanctions violations or terrorist financing; and
- to comply with applicable antitrust and competition laws.
2. Diversity and Inclusiveness
Our sourcing decisions, contracts and management of supplier relationships will reflect and promote the principles of the Hiscox Group DEI Policy (incorporating equal opportunities) in that they will seek to ensure that; Suppliers do not victimize, harass or discriminate against any employee or party to the contract due to their sex, gender, gender identity, sexual orientation, ancestry, disability, age, religion, beliefs, marital status, military service, veteran status, genetic information, social class and race including colour, nationality, citizenship status, ethnic and/or national origin. Suppliers will be required to:
- meet the requirements of any applicable discrimination legislation
- have a policy regarding providing a work environment that is free of unlawful harassment and discrimination based on any legally protected characteristic.
It is Hiscox’s commitment that diverse business enterprises shall have equal opportunity to compete for all goods and services to become preferred suppliers and/or subcontractor(s) for the organization. Our suppliers will be treated fairly and equally during the tendering and purchasing process, with decisions made on the basis of clear selection criteria.
Hiscox is committed to the development and growth of diverse business enterprises to build a better working world and to expand networks to build trusted and enriched relationships.
3. Conflicts of Interest
Maintaining a culture of transparency and accountability, Hiscox is committed to identifying, assessing and effectively managing the risks relating to conflicts of interest insofar as they relate to the Group. Suppliers must not directly or indirectly offer improper payments or inducements to Hiscox members of staff that may prejudice their ability to act in the best interests of Hiscox or detract from the impartiality that Hiscox demonstrates in its supplier engagements and decision-making process. All actual, potential or perceived conflicts of interest, such as family relation or business relationship, must be disclosed in a transparent manner to our Procurement team. Suppliers should also:
- identify and maintain records of any material conflicts within their business;
- ensure that appropriate controls are in place which are proportionate to the level of risk posed by the particular business they carry out;
- provide their staff with adequate training in identifying conflicts of interest and understanding relevant procedures as well as their individual obligations; and
- ensure that boards and committees are provided with appropriate information to enable them to oversee the management of conflicts of interest.
4. Human Rights and Labour Practices
Hiscox is committed to upholding the human rights of workers and advocating fair employment practices. We expect that all suppliers support the protection of human rights and are not complicit in violations or abuses of such. They shall:
- act pursuant to all applicable anti-slavery and human trafficking laws and regulations, taking a zero-tolerance approach to slavery, forced labour, human trafficking and child labour in any part of their business or supply chains;
- comply with all applicable wage and working regulations;
- respect the rights of workers to freedom of association and collective bargaining in line with local regulations;
- seek to increase procurement with diverse suppliers and diversity of their governing boards.
5. Health and Safety
It is our policy to provide a work environment that ensures the health, safety and welfare of all our workers as well as those affected by our operations. We consider it a moral duty for all employers to do so and therefore expect our suppliers to fulfil this by complying with applicable health and safety legislation and regulations. They shall also have in place business management practices that cover the following elements:
- providing all workers with adequate health and safety training and information;
- carrying out regular risk assessments and maintaining emergency evacuation procedures;
- monitoring and reporting on health and safety performance; and
- enabling workers to meet their responsibilities for maintaining a safe and healthy workplace.
Hiscox has a responsible approach to managing the environmental impact of our business activities and actively seeks to minimise it. In line with our environmental policy, we expect our suppliers to ensure business practices meet all applicable environmental laws and regulations and encourage them to have policies for effective environmental management in support of the following efforts:
- purchasing energy from renewable sources where possible;
- operating effective waste management systems; and
- monitoring and reporting on environmental performance.
7. Risk Management
Suppliers are expected to have robust risk management and assurance processes in place that are proportionate to the size of the organisation and the goods or services provided, covering key risk areas including, but not limited to, information and cyber security, privacy, business continuity, supplier governance, financial crime, and regulatory compliance. This ensures that we work with operationally resilient businesses and thereby safeguards the relationships between us and our suppliers.
Our suppliers must have management and governance processes in place to maintain the standards set out in this Code of Conduct and be able to demonstrate compliance if required. They must also make reasonable efforts to monitor their supply chains, ensuring their suppliers aspire to the same standards. In line with our procurement procedures, suppliers may be required to acknowledge their adherence to the Code of Conduct in writing. Supplier commitment to this Code of Conduct forms an integral part of our sourcing process and is taken into account when selecting new suppliers or renewing existing contractual relationships.
9. Reporting channels and grievance procedure
If, in dealings with Hiscox, suppliers become aware of any actual or suspected violation of this Code of Conduct or breach of any applicable law that affects us, they should bring it to our attention through appropriate reporting channels. We have a fair and equitable grievance process in place which we take extremely seriously and through which action can be taken where necessary.
Suppliers are encouraged to raise a concern with their Procurement contact at Hiscox in the first instance, who are duty-bound to pass on the information to senior management.
If a supplier feels that this is not an appropriate route, they may bring the matter of concern in confidence to the Head of Group Internal Audit by phone or email (Chris Hood: [email protected]; +44 (0)20 7614 5474). All Hiscox suppliers worldwide can access free, confidential advice on how best to raise a whistleblowing concern from Protect (www.protect-advice.org.uk; +44 (0)20 3117 2520), an independent charity. It should be noted, however, that this is not an actual means of disclosing a concern.
Our approach to climate issues and the changes taking place in the global risk landscape.
Hiscox’s approach to climate change (PDF)
Climate change is one of the biggest challenges the world is currently facing and the (re)insurance industry has a key role to play in helping communities prepare for – and adapt to – the changes taking place in the global risk landscape. Sea levels are rising, the frequency and severity of natural catastrophes is changing, the planet is warming; and these factors have primary and secondary consequences for consumers, corporations and communities.
Over many years, (re)insurers have been building a robust framework for assessing natural catastrophe risk, and Hiscox prides itself on contributing to this development. That’s because we understand that we are part of something beyond the bottom line and take our role in the world seriously. Climate change goes beyond natural catastrophes though, and so our work extends to understanding the effects of transitional risks as well as liability and asset risks which have the potential to impact underwriting, claims, reserving and investments. Interest in environmental, social and governance (ESG) performance – from regulators, investors, media, customers, employees, as well as those who may want to work with us or buy from us in the future – has never been greater, and their interest serves as a reminder to every business, including our own, to do the right thing.
So, when it comes to climate change, we have an important part to play in helping our customers prepare for the worst, through our products and services, and recover from it. We also use our research, insight and experience to help shape policy and strategy, both individually and in collaboration with appropriate industry bodies. As a result, every area of our business, from our retail segments through to our big-ticket London Market and reinsurance lines, considers climate-related issues both in how they underwrite and operate.
Climate change challenges for (re)insurers
It affects different perils in different ways
Climate change is impacting different perils in different ways. For some, we can see a clear correlation, while others are less clear-cut. For example, scientific evidence strongly suggests perils such as wildfires, typhoons and floods are linked to climate change, while research into the impacts on atmospheric perils like windstorms is more ambiguous, so there is more work to be done to understand climate change impact.
As risks evolve, so does the cost of insuring against them
Climate change is causing traditional risks to evolve and new risks to emerge, which makes investing in catastrophe research and modelling absolutely vital. Having a risk modelling framework that captures climate change risk in a more comprehensive and systematic way is an industry-wide imperative and we are pleased to contribute to this.
There is potential for the climate protection gap to grow
As the world becomes riskier, our industry needs to be at the forefront of developing new products and evolving existing ones, and in aligning new sources of capital with the emerging climate protection gap. This is clearly challenging as some regions or risks become harder to (re)insure, but also creates opportunities for the (re)insurance industry to deliver new, sustainable solutions that address the changing requirements of our customers.
Reducing the protection gap created by climate change with products and services
Climate change has an effect on existing risks, and creates new ones, and it is our job to respond to these. We are helping to create more resilient communities and economies by evolving our existing products and services and creating new ones that address emerging risks. We’ve already done this successfully with flood risk, particularly in the UK and the USA where we’ve seen the frequency and severity of the risk change and have responded with new insurance and reinsurance products (FloodPlus), and will do so again in other areas.
Leading the way in the identification, understanding and management of climate risk
We have a market-leading catastrophe research team, and have done for many years. They are responsible for driving our view of risk forward, using both internal and external models to develop what we call ‘the Hiscox view of risk’. The Hiscox view of risk summarises our analysis of natural catastrophe perils globally and incorporates the latest understanding in climate science to inform our underwriting and portfolio selection. This includes looking at peril and regional links to climate change, and evolving event trends. Climate change-related research is important for our business and is an area we continue to invest in.
Working with our underwriting model vendors
We are actively working with underwriting model vendors to ensure they are aware of the industry’s requirements in light of a changing and uncertain risk baseline. An example of this is our work relating to US wildfire. Having reviewed an out-of-the-box model vendor solution for US wildfire modelling, we decided to make adjustments to allow for the current trended conditions and risk profile. This was due to the fact that when reviewing the historical data, we saw a clear upwards trend in the association between burn areas and frequency of drought, which wasn’t recognised in the model. As a result, we made appropriate adjustments to ensure we accounted for what may be a large climate change signal. We have taken a similar approach to Japanese typhoons, where we have explicitly considered climate change as part of our review of the risk.
Supporting the transition to a low carbon economy through our exclusions policy
As a (re)insurer we have a role in ensuring an orderly transition to a low carbon economy. Our ESG exclusions policy outlines our commitment to reduce steadily – and eliminate by 2030 – our insurance, reinsurance and investment exposure to coal-fired power plants and coal mines; Arctic energy exploration, beginning with the Arctic National Wildlife Refuge; oil sands; and controversial weapons such as land mines. We will balance our reduced exposure in these areas with increased appetite for sustainable ventures such as wind farms and crop insurance.
Stress testing and scenario analysis
We have an embedded internal programme of annual stress testing, which enable us to understand the implications of certain potential events on our underwriting and claims exposure, risk appetite and operational capabilities. This programme of stress testing includes our participation in the Prudential Regulation Authority’s annual General Insurance Stress Test (GIST), which in 2019 included a specific climate change element. The 2019 exercise, when augmented with research, illustrated that catastrophe risk models can be used to assess the effects of climate change on portfolio results for a multitude of timescales, and will enable a market for climate change products providing coverage on much longer timescales than is currently the norm. We continue to leverage the outputs of the GIST and consider further stress and scenario testing as part of our annual programme.
Engaging with our investment managers
There are a multitude of risks that could affect our investments, and climate change affects a number of these directly or indirectly. Like others, we continue to develop our approach to climate change when it comes to making investment decisions, considering the implications of climate change on a whole range of factors. While certain industries are clearly exposed to climate and long-term investment risks, individual company exposures are not clearly defined and are not static, so we take a considered approach. We are guided by our responsible investment policy, which includes exclusions such as coal-fired power plants and coal mines; Arctic energy exploration, beginning with the Arctic National Wildlife Refuge; oil sands; and controversial weapons such as land mines. The policy also outlines our approach to impact investing. We expect our asset managers to have sound ESG practices and invest in companies that do too, which is why we conduct an annual ESG integration assessment of our investment managers.
Board and Executive Committee oversight
We have established a cycle of twice-yearly reporting to the Board and the Executive Committee on climate-related issues to ensure appropriate senior level oversight. Board sessions are designed to provide challenge and approval of key ESG matters, including climate-related issues, while the Executive Committee focuses on setting ESG strategy and reviewing plans. We also hold annual focus groups with our Non Executive Directors to gain additional Board level insight into current and future ESG issues.
Monitoring, measuring and publicly reporting on our progress
We have appropriate structures and processes in place to monitor and measure our progress on environmental issues, and to publicly report on our progress annually. Our environmental policy sets out the standards we aim to achieve throughout Hiscox Group, and our annual climate report tracks our progress against climate-related issues. We have also developed an ESG dashboard which allows us to internally monitor our performance relating to ESG issues.
We support the Task Force for Climate-related Financial Disclosures (TCFD), which aims to improve the consistency of companies’ climate-related financial risk disclosures, and we currently complete public disclosures to showcase our climate-related work via CDP, ClimateWise, Dow Jones Sustainability Index, FTSE4Good, ISS and Sustainalytics.
Reducing the impact of our business operations
Being environmentally responsible matters to us, which is why we set key performance indicators for reducing our carbon emissions, and maintain carbon neutrality through carbon offsetting. In 2020, we announced that we had reduced our Scope 1, 2 and 3 emissions by 45% per employee since 2014, and in 2021 we will set new GHG targets that are aligned with the globally recognised standard, SBTi (the Science Based Targets initiative). We also have a network of country-specific green teams which are led by our employees who work together to drive local initiatives that promote recycling, reduce waste, and positively impact on our carbon footprint.
Informing public policy-making
We recognise that we cannot change policy alone, but will have more influence partnering with others. That’s why we work with policymakers and engage in public debate on climate change issues, both individually and as an active member of relevant industry bodies, such as the Association of British Insurers, and through Lloyd’s as a London Market participant. We are also a founding member of the global (re)insurance industry network, ClimateWise, a joint venture between the Cambridge Institute for Sustainability Leadership (CISL) and the (re)insurance industry to help the industry better communicate, disclose and respond to the risks and opportunities of the climate risk protection gap. We are proud of our involvement, both at a working group and at Board level. Most recently, this has included contributing to consultations on climate change, biodiversity and green finance, and on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change. We also contribute to the Climate Financial Risk Forum (CFRF), a joint initiative between the Prudential Regulation Authority and the Financial Conduct Authority which seeks to build capacity and share best practice across the financial sector to advance the response to the financial risks from climate change. Through a supervisory college meeting with the BMA, we set out to them our approach to climate-related issues, and are working to address the European Insurance and Occupational Pensions Authority’s (EIOPA) sustainable finance action plan for tackling ESG risks as well as the integration of sustainable risk into Solvency II. Given changing expectations on business preparedness for climate-related issues, we expect regulatory interest in this topic to continue to increase over time.
Building research partnerships
We are a member of the LightHill Research Network, a not-for-profit organisation with the specific aim of enhancing knowledge transfer into business from academic, government and commercial experts at the forefront of risk-related research. Climate change is currently one of the priority research themes being explored by the Network, and as a member of the LightHill steering group we are pleased to play an active part in shaping this agenda.
Our approach in action
FloodPlus – our Hiscox London Market flood product offering
In response to the deregulation of the US flood insurance market, and the changing nature of the flood risk, in 2016 our London Market team launched FloodPlus – a new flood product for US homeowners. The product went some way to meeting a shortfall in flood cover for many homeowners, by offering higher limits and a wider scope of cover than was previously available. It was tested in 2017, when Hurricane Harvey stalled over Houston and caused unusual and extensive flooding, and responded as it should – paying claims and getting people back on their feet. In 2018, we broadened our offering with a new FloodPlus commercial product. Both of our FloodPlus products use proprietary technology and advanced analytics to provide more substantial cover at a fairer price than those available through the government-backed scheme, and we will consider building out our offering further in the future as the risk evolves.
Investments – reviewing our managers
We review our investment managers and portfolios each year, including periodic assessment of their ESG integration into their investment approaches. All of the investment managers we work with have a strong focus on good governance in the companies in which they invest. This has been part of their investment processes for many years, meaning the ‘G’ in ESG has been a long-term theme of our investments. In recent years, more managers have been building out their approach to incorporate research of the environmental and social aspects of ESG investing. Most of our managers have now embedded ESG factors into their everyday research and risk processes, seeing ESG factors as risk reducing, Hiscox’s approach to climate change and over 99% of them are signed up to the United Nations-supported Principles for Responsible Investment (PRI). Our asset managers also have the capability to invest in green bonds, should they meet our investment criteria.
Catastrophe research and modelling to improve our wildfire risk understanding
The devastating California wildfires of 2018 highlighted the wildfire risk for (re)insurers worldwide, and we invested in new research and modelling to further increase our understanding of the risk. By licensing a new risk model for wildfire, and applying our own in-house research to it – giving us the ‘Hiscox view of risk’ – we have significantly increased our understanding of the risk and are now able to set premiums more accurately.
As the climate change risk evolves, so too does our approach. This is an overview of current climate-related activity across the Group, but there is more to do and we recognise that. Addressing the climate protection gap matters to us, it matters to our business partners and most importantly it matters to our customers and colleagues, so we remain committed to making a positive contribution on this issue.
More information can be found on the responsibility section of our website, www.hiscoxgroup.com/responsibility.
Updated May 2021
(Re)insurers have a role in ensuring an orderly transition to a low carbon economy and we want to play our part. Hiscox has a Group-wide exclusions policy, effective from 1 January 2022.
ESG exclusions policy (PDF)
(Re)insurers have a role in ensuring an orderly transition to a low carbon economy and we want to play our part. Hiscox has a Group-wide exclusions policy, effective from 1 January 2022, when we intend to:
- no longer provide new insurance cover to thermal coal-fired power plants, thermal coal mines, Arctic1 energy exploration activities, oil sands or controversial weapons;
- no longer reinsure portfolios where 30% of the premium base derives from thermal coal-fired power plants or thermal coal mines, Arctic1 energy exploration activities, oil sands or controversial weapons;
- not directly invest into securities of companies that generate more than 30% of revenues from thermal coal extraction or power generation, Arctic1 energy exploration activities, oil sands or controversial weapons.
Ultimately our ambition is to phase out (re)insurance of thermal coal-fired power plants and thermal coal mines, Arctic1 energy exploration activities and oil sands by 2030, in line with the 2015 Paris Agreement and UN Sustainable Development Goals.
This policy has been designed to contribute to the insurance industry’s role in supporting the transitioning economy, and aligns to the Lloyd’s ESG ambitions published in December 2020. It supports our wider ESG activity, including our annual cycle of carbon reporting and offsetting, and our emissions reduction programme. For more information, visit www.hiscoxgroup.com/responsibility.
1 Arctic National Wildlife Refuge (ANWR) region.
This statement sets down the principles governing investment decisions for the Hiscox Pension Scheme in order to meet the requirements of the Pensions Act 1995, the Pensions Act 2004 and subsequent relevant legislation.
Statement of Investment Principles
Being a responsible business matters to us, and our Group-wide responsible investment policy sets out our position and vision regarding investments as part of the Group’s ESG strategy. Our responsible investment policy is applicable across all Hiscox subsidiaries.
Responsible investment policy statement (PDF)
Being a responsible business matters to us, and our Group-wide responsible investment policy sets out our position and vision regarding investments as part of the Group’s ESG strategy. Our responsible investment policy is applicable across all Hiscox subsidiaries.
We believe ESG factors can have an impact on risk and returns across asset classes, sectors, geographical regions and companies, and should be integrated into our investment process.
The policy sets out the high-level responsible investment principles implemented within Hiscox’s investment portfolio by our in-house investment team, under the supervision of the Hiscox Investment Group. It also guides our appointed external asset managers and informs other company stakeholders. Day-to-day management of our assets is outsourced to selected asset management firms, with our in-house investment team retaining responsibility for management and oversight of external asset managers, including their approach to ESG issues.
We expect our appointed asset managers to integrate ESG considerations in their investment processes and stewardship activities and, ultimately, to invest in companies that have sound ESG practices. Organisations that understand and successfully manage material ESG factors and associated risks and opportunities tend to create more resilient, higher-quality businesses and assets, and are therefore better positioned to deliver sustainable value over the long term.
In-depth evaluation of external managers’ ESG integration forms a fundamental element of our manager selection and monitoring processes, including:
- adherence to internationally recognised ESG standards such as the Principles for Responsible Investment (PRI), and annual confirmation of continued adherence;
- ESG policies, procedures and resources to integrate ESG issues into decision-making;
- supporting Hiscox with the provision of TCFD-compliant portfolio data;
- engagement on ESG issues with portfolio companies on our behalf;
- ESG disclosure and reporting on ESG issues and engagement.
Where Hiscox has direct control over portfolios investments, exclusions are applied as laid out in our ESG exclusions policy. Where Hiscox invests indirectly via pooled funds and has no direct control over portfolios, desired exclusions are shared with the investment manager and applied if possible.
We also ask our managers to respect human rights, including the avoidance of investments that would contravene the human rights, labour, environment and anti-corruption principles of the United Nations Global Compact.
In addition, we consider allocating capital to impact and sustainable investments, providing they integrate within the overall portfolio risk/return objectives and liquidity guidelines, while incorporating sufficiently high standards of impact definition, measurement and reporting.
Key policies and disclosures for Hiscox Group.