CSRD Requirements for Insurance Companies: What Small Insurers Need to Know

Whether you’re a small insurer, a regional mutual, or a captive subsidiary within a larger group, sustainability reporting is becoming part of how insurance operates across Europe. Some organisations report directly under the CSRD, while others use the voluntary VSME Standard to meet client or investor expectations. Either way, structured reporting helps insurers explain how sustainability risks influence underwriting, claims, customer products and investment portfolios.

Small insurers often feel the pressure first: large corporate clients ask for sustainability data, banks want visibility into climate-related risks, and regulators expect clearer risk assessments. This guide translates the CSRD expectations into practical, achievable steps tailored for small insurance organisations.

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1. Why CSRD Matters for Insurers

Insurance companies sit at the intersection of climate risk and financial resilience. If floods, storms or heatwaves become more frequent, underwriting exposures change. Investment portfolios can also face transition risk as sectors decarbonise.

The CSRD formalises how insurers explain these connections. Even if your organisation is below mandatory thresholds today, CSRD-style reporting is increasingly requested by clients and counterparties. Many small insurers choose the VSME approach because it offers a simpler structure while still aligning with ESRS themes.

For broader context on timing and obligations, you can refer to the EU-wide overview of CSRD deadlines.

2. Core CSRD Topics Relevant to Insurance

2.1 Climate risk and underwriting

Insurers must show how environmental risks affect their business model and products. This includes:

• Physical risk exposure (e.g., property insurance in flood zones)
• Transition risks affecting insured sectors (e.g., carbon-intensive clients facing stricter regulation)
• How underwriting guidelines address sustainability issues
• How pricing, exclusions or product design incorporate climate risk insights

These expectations align with ESRS E1 on climate, but small insurers can approach them proportionately through qualitative explanations and simple metrics.

To get familiar with the structure of simplified disclosures, the VSME overview is helpful: The VSME Basic Module Explained.

2.2 Insurance product impacts

Insurers increasingly consider how their products influence behaviours. Examples include:

• Incentives for lower-carbon transport or heating
• Requirements for risk-mitigation behaviours (e.g., fire safety, water leak sensors)
• Life and health products that intersect with social topics

These are often narrative disclosures about product design choices, customer impacts and risk-prevention practices.

2.3 Investment portfolios and financed impacts

Even small insurers hold investment portfolios. Under CSRD, disclosures typically cover:

• Portfolio exposure to carbon-intensive sectors
• Climate risk assessments linked to transition pathways
• Policies for sustainable or exclusion-based investment strategies
• Targets for improving portfolio alignment

You can start with a basic high-level breakdown and scale up only when data becomes available.

2.4 Governance and business conduct

Good governance is central to financial services. CSRD expects clarity on:

• How leadership oversees sustainability risks
• Anti-corruption and ethics policies
• Roles and responsibilities for risk management
• Integration of sustainability considerations into pricing, claims and investment decisions

Governance topics form part of most sustainability requests from banks and large corporate clients, as summarised in guides such as CSRD Supplier Requirements: What Small Businesses Should Expect in 2025.

3. What Small Insurers Need to Report: A Practical Breakdown

3.1 Strategy and risk management

Small insurers can keep this section simple:

• A short description of your business model and key product lines
• Material sustainability risks affecting underwriting and investments
• How you monitor climate, social and governance risks
• Any transition plans or long-term sustainability commitments

This aligns with the VSME Comprehensive Module, but even basic reporters can provide a short narrative that demonstrates awareness.

3.2 Metrics for direct operations

Even office-based insurers must disclose core operational data:

• Energy use (electricity and heating)
• Scope 1 and 2 emissions
• Business travel, if material
• Water usage only if relevant (e.g., in multi-building operations)

These are manageable metrics for most insurers, particularly when only one or two offices are involved. If you’re new to operational data, the SME overview in CSRD for SMEs: The Complete 2025 Guide provides useful context.

3.3 Underwriting metrics and qualitative disclosures

Small insurers rarely have the modelling capacity of large carriers. Still, achievable disclosures include:

• Main categories of insured risks (property, motor, liability, health)
• Share of policies in climate-exposed regions (if relevant)
• Qualitative explanation of how climate or social considerations influence underwriting processes
• Claims trends linked to extreme weather or social factors

These insights strengthen client confidence and support internal risk management.

3.4 Investment-related disclosures

A simple format works well:

• Breakdown of major asset types (e.g., sovereign bonds, corporates, real estate funds)
• Any sustainability screens or exclusions
• Any portfolio goals (optional for small insurers)
• Summary of how climate risk informs investment decisions

If you already produce reports for regulators or asset managers, much of this information can be reused.

3.5 Governance and business conduct

Proportionate disclosures include:

• Code of conduct overview
• Anti-corruption systems and training
• Board or committee oversight for sustainability and risk
• Roles responsible for environmental and social topics

Business conduct is a core regulatory topic across industries; for a wider context, the hub on CSRD Compliance is helpful.

4. How to Start: A Simple Roadmap for Small Insurers

Step 1: Map your activities to sustainability topics

List your underwriting lines, investment assets and operational footprint. Identify areas with the strongest link to climate or social risks.

Step 2: Decide whether CSRD or VSME fits best

Small insurers often begin with the VSME Basic Module, adding elements from the Comprehensive Module as needed by stakeholders.

CSRD vs VSME: Which One Applies? →

Step 3: Set up light-touch data collection

Start with energy bills, travel records, and simple underwriting and investment summaries. Avoid complex tooling until your reporting processes stabilise.

Step 4: Draft narrative explanations

Explain your risk approach, portfolio strategy and governance oversight in plain language. Consistency is more important than technical sophistication.

Step 5: Review and align with client expectations

Large corporate clients, reinsurers and banks may request specific datapoints. Using VSME formatting ensures your disclosures are easier for them to integrate.

Frequently Asked Questions

Do small insurers need to comply with CSRD directly?

Only insurers that meet CSRD thresholds or are listed on regulated markets report mandatorily. However, many smaller insurers still provide CSRD-style data because clients, banks and reinsurers increasingly require it. If you’re assessing your position, the overview of CSRD for SMEs is a helpful starting point.

How should a small insurer assess climate risk in its underwriting portfolio?

Start with a simple mapping of the main insured risks (property, motor, liability) and identify any climate-exposed segments. Claims data, regional risk maps and basic scenario assumptions are enough for an early assessment. For organisations deciding how to structure their disclosures, the guidance in The VSME Basic Module Explained can help clarify what is expected.

What sustainability data do insurers need from their investment managers?

Most small insurers request sector exposure data, ESG screens applied, and high-level climate risk indicators from their asset managers. You may also ask for alignment with your own sustainability policies. If you are preparing to share this information with clients, the guide on CSRD Supplier Requirements outlines how counterparties typically use such disclosures.

Can a small insurer start with VSME and move to CSRD later?

Yes. Many start with VSME because it is simpler and proportionate, then expand disclosure depth as expectations rise. Since VSME aligns with ESRS topics, transitioning later is manageable. For a comparison of the two pathways, see CSRD vs VSME: Which One Applies?.

Key Terms

• CSRD: EU directive requiring structured sustainability reporting.
• VSME: Voluntary reporting standard for micro, small and medium organisations.
• ESRS: European Sustainability Reporting Standards used under CSRD.
• Physical Risk: Climate-driven risks such as floods or storms.
• Transition Risk: Economic changes arising from decarbonisation.
• Financed Impacts: Environmental or social impacts linked to investment portfolios.

Conclusion

For small insurers, CSRD-style reporting is less about producing complex models and more about demonstrating clear, structured thinking on sustainability risks. A modest set of metrics, supported by concise narrative explanations, is enough to meet the expectations of clients, reinsurers and partners. With a clear structure and consistent effort, CSRD becomes an advantage — not an obstacle — helping insurers strengthen trust and improve long-term resilience.