Otsego Mutual prides itself on being one of a handful of insurers in the United States that has received the coveted A+ (Superior) rating from A.M. Best Company for more than 75 consecutive years. Now in our 125th year, financial stability is a vital part of our strategic goals, and also helps drive our approach to Environmental, Social and Governance (ESG) factors.
(E) - Environment
Assessing and managing climate risk is a crucial part of our sustainability. As a property insurer focusing on insuring properties in the state of New York, we face weather-related challenges which could create substantial losses to our capital. Annually, we conduct catastrophe modeling to simulate losses at different time intervals for extreme weather events. The result of this modeling drives our underwriting decisions daily and helps inform our annual purchase of catastrophe reinsurance to help mitigate this risk.
The risks that are caused by not responding to climate change while society moves toward a greener economy can cause unwanted regulations, as well as market pressure and asset markdowns. We employ various strategies to mitigate this risk and consistently monitor our invested assets and consider factors like sustainability, carbon risk and diversification when making investment decisions. Further, all investments in governments and municipal bonds are spread geographically across the U.S. with very minimal exposure to any municipality in the state where severe weather would inflict damage, thus mitigating loss correlation from physical risk and market risk.
Our senior management members meet consistently to discuss and act upon improving our daily processes to help limit our footprint on the ecosystem. As a result of these conscious decisions, we have recently performed energy efficiency upgrades to our home office lighting and HVAC systems; made upgrades to our IT equipment/servers, changed our underwriting guidelines to allow for properties using renewable solar energy, and have updated our billing programs to grow and encourage more usage of electronic payments. In the past few years, our property claim files are paperless, and by the end of 2022 we expect to complete the transformation of our underwriting files from paper to digital format.
(S) – Social
To assure long-term sustainability, our workplace culture encourages employee longevity and commitment to supplying unrivaled service to our stakeholders. We use creative measures to ensure our employees are happy and productive. These programs include reduced workweeks for better work/home balance, staff development, wellness programs and team-building activities to ensure workplace happiness. Happy employees are better employees. Our average employee has been employed here more than 17 years, and our customer service is second to none. This has led the Professional Insurance Agents of NY (PIANY) to vote us New York’s Top Overall Carrier for the past three carrier performance surveys. Our team of employees is supplemented by local agents, inspectors and claims adjusters to better serve our policyholders in their neighborhoods.
(G) – Governance
As part of our corporate governance efforts, the risks from ESG are monitored by the Board of Directors and senior management. The comprehensive ERM framework highlights the six major risks we face and many of the risks from the monetary impact of climate change are dealt with through risk statement and risk tolerance guidelines within the framework.