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Last Updated 4/18/2025

Issue. Social impact investments are financial investments made with the explicit intention of addressing social concerns while earning an adequate risk-adjusted return. Insurers have already made substantial social impact investments. In a 2024 report, the VsportV����’s Center for Insurance Policy & Research (CIPR) estimated that, at their 2020 baseline, insurers in the aggregate held $158 billion in social impact investments on their balance sheets, accounting for 2.7% of cash and invested assets.[i] This estimate is conservative, as not all social impact investments are identifiable on firm balance sheets.[ii] CIPR later projected aggregate social impact investments to have reached $171 billion in 2023, maintaining its share of total cash and invested assets.[iii] 

Many insurers that have not made social impact investments have expressed an interest in doing so. In a 2025 survey of 235 insurance industry investors, Nuveen found that 63% of North American insurers consider impact (including “green investments in this case) in their investment decisions.[iv] Moreover, 55% manage a separate allocation carve-out for impact investments. Further, 58% of North American insurance companies agree that “impact investments will be an increasingly important allocation [for them] in the coming years” and are “considering or planning to consider” impact in their investment decisions. When asked in a separate Nuveen survey if they felt that “factoring in responsible investing risks and opportunities should always be part of the investment process, 76% of insurers either strongly (35%) or somewhat (41%) agreed.”[v]

Background. The goal of social impact investing is to align the traditional motivation for investing—an adequate and competitive risk-adjusted financial return that meets regulatory requirements—with a secondary motivation of contributing to positive social outcomes. Social impact investing is different from philanthropy, where investments are focused entirely on social impact. Many companies, including insurers, make philanthropic investments, but social impact investments are balance sheet investments made with general funds. Investments in this context fall along a spectrum between traditional investing, where the motivation is purely financial, and philanthropy, where the focus is purely impact.[vi] (Refer to Figure 1.)

Figure 1. Social Impact Investing Spectrum

Although most insurer-investors take a finance-first approach, where social impact is secondary to earning a market-rate, risk-adjusted return, some may be willing to accept a lower risk-adjusted return in favor of greater social impact. That said, there is no inherent trade-off between financial performance and social impact. And regardless of primary investment motivation, most insurers want to see a tangible social impact. 

Why Social Impact Investing? Insurers make social impact investments for several reasons.[vii] First, insurance companies are in the business of managing risk. Social issues can introduce long-term risks into their financial portfolios. Hence, efforts to address social issues could be seen as a long-term risk management practice. 

Second, many insurers see a link between their core business, underwriting risk, and the goal of creating a sustainable and resilient society. For example, an insurer that underwrites residential property may see a connection between its underwriting business and investments in sustainable, affordable housing.

Third, social impact investments can generate corporate goodwill. Being seen as socially responsible can enhance an insurer’s brand and reputation.[viii] Indeed, some insurance companies view their role as not only providing insurance but also being responsible corporate citizens.[ix] Moreover, increasingly, both individual and institutional clients, as well as internal stakeholders, are demanding socially responsible investment products. 

Finally, some insurers make social impact investments in hopes of improving financial performance and/or better managing risk. In the , 14% of survey respondents (10% in North America) reported that the primary driver in adopting ESG was to improve performance.[x] Another 10% (globally and in North America) reported risk management to be the primary driver.

Many social impact investments earn market or above-market returns. The research does not bear the perception that social impact investments underperform other types of investments. Existing empirical evidence on the financial performance of social impact investments vis-à-vis non-impact investments is mixed, but there is an increasing body of evidence that firms with better “social performance” have moderately better financial performance.[xi] These gains may take time to materialize, however. A recent study of Standard & Poor’s 500 index (S&P 500) companies reports that companies with “good social impact practices” often outperform their counterparts in the long run.[xii] Most insurance companies, particularly life insurers, have long-term investment horizons. Although a lack of longitudinal data and sufficient volume of social impact investments challenge researchers seeking to explore the financial performance of social impact investments, research in this area is accelerating.[xiii] 

Under the federal  (CRA), commercial banks are required to make “social impact investments” in the areas where they do business, specifically in areas where they take deposits.[xiv] No similar regulations require insurance companies to make social impact investments. However, state insurance regulators may have some involvement in the social impact investing space.

The (COIN), which is part of the  (DOI), collects reports from insurers and insurance holding companies on community development and environmental (green) investments made in California. These reports are required if annual premiums written in California exceed $100 million for any reporting year (). Some smaller insurers voluntarily report their impact investments. In addition to collecting this information, COIN tries to facilitate social impact investing by matching funders with projects. However, insurance companies doing business in California are not required or directly encouraged to make social impact investments—only to report them.

Types of Social Impact Investments. Social impact investments are evolving into a separate asset class.[xv] Social impact investments made by insurers come in a variety of forms. The most common social impact investment type in the insurance industry is socially oriented municipal bonds (often private activity bonds and mortgage revenue bonds), followed by Low-Income Housing Tax Credit (LIHTC) equity funds.[xvi] By investing in LIHTC funds, insurers receive a proportionate distribution of dollar-for-dollar (federal) tax credits, delivered over 10 years, and depreciation allowances from the properties financed by the LIHTCs. In 2022, insurers held nearly $9 billion in LIHTC equity funds, according to VsportV���� calculations.

Other avenues through which insurers have made social impact investments include community development financial institutions (CDFIs), loan funds, social infrastructure private equity funds, mortgages, private credit,  and direct investments, among others.[xvii] 

Investment targets span a wide range of sectors and issues and depend on the specific social and financial goals of the investor. Social impact investors generally look for areas where impact can be a natural extension of their existing investment strategies. Among the three asset classes attracting the most attention from insurance companies is affordable housing, which has been a “staple investment of the insurance industry through tax credits.”[xviii] One-third of North American insurers have made or are considering making investments in affordable housing. In addition, 24% are making or planning to make investments in innovations that address financial inclusion, and 15% are making or planning to make investments in affordable healthcare.[xix]

In October 2021, the VsportV����’s Center for Insurance Policy & Research (CIPR) produced the report Can Insurance Company Investments Help Fill the Infrastructure Gap? That report investigated various aspects of insurer investments in economic infrastructure. In 2023, the CIPR extended this body of work to social infrastructure, particularly social impact investments focused on low- and moderate-income populations and other vulnerable and marginalized populations. The CIPR took on a large-scale investigation of social impact investments to understand comparative financial performance, regulatory implications, and, more generally, the opportunities and pitfalls that these types of investments present. The CIPR released a report from these efforts, “Social Impact Investments in the U.S. Insurance Industry,” in March 2025.

The VsportV����, including the CIPR and the Securities Valuation Office (SVO) [refer to the Valuation of Securities (E) Task Force (VOSTF)], regularly engages stakeholders on this issue, including (but not exclusively) the  (ACLI), state insurance regulators, insurers, community development organizations, and community development practitioners. Further, a group of VOSTF members continues to pursue strategies around the regulation of social impact investments.