Social issues are becoming increasingly prominent, and insurance companies are in a unique position to help address them. Insurance companies manage trillions of dollars in assets around the world, have direct connections to individual consumers and businesses, and play an important role in society. In addition, business opportunities are expanding as we take on the challenge of social issues.
So far, most insurance companies have not pursued this opportunity, but they should. As regulations evolve and stakeholder expectations increase over the next three to five years, social issues will become even more relevant. Forward-thinking insurance companies can enjoy a first-mover advantage by acting quickly.
BCG recently conducted a survey of executives at insurance companies around the world, from executives to managers, to understand the current state of progress in addressing social issues. As a result, most companies implement a small number of individual initiatives (such as programs to improve workforce diversity, equity, and inclusion) that are primarily aimed at reaping reputational benefits. This shows that we are only just getting started. While a worthwhile endeavor, the greater opportunity lies in addressing broader societal needs, including those of vulnerable customers.
Recent events such as the pandemic, falling real wages, rising inflation, and frequent climate-related disruptions have all exacerbated social inequalities in many countries, pushing more people closer to the poverty line or into poverty. I’m pushing it below the line. Insurers can support vulnerable groups by embracing financial inclusion (providing affordable products that meet the needs of a wide range of customers) and achieving economic well-being (increasing people’s economic resilience). Masu. In doing so, insurers not only improve the lives of their customers, but also enjoy tangible business benefits such as increased revenue, improved shareholder returns, improved employee morale, and a stronger, more reliable brand reputation. You can also achieve the above benefits.
The main findings from the analysis are:
- 76% of insurers still prioritize the reputational benefits of addressing social issues over business value. One explanation could be that 71% struggle to quantify the business value of social issues.
- Roughly three-quarters of respondents from retail property and casualty insurance companies, health insurance companies, and investment and asset management companies said financial inclusion and economic well-being should be a priority on the social agenda.
- From a strategic maturity perspective, only 13% of companies have integrated social considerations as a core part of their overall business strategy, and none are leveraging it as a source of competitive advantage.
- 37% of insurers have no social impact incentives, and half have incentives tied to business metrics rather than performance.
- When it comes to a just transition to environmentally sustainable energy, only 31% of insurers are actively mitigating the negative impacts of these programs, which can place a disproportionate burden on vulnerable populations. Yes, and 38% take a more restrictive approach of doing no significant harm.
While some aspects of environmental, social, and governance initiatives involve trade-offs for insurers, our experience is that addressing social issues does not. This is a rare win-win situation where good deeds create real business value.
For example, a major insurance company recently launched an independent umbrella insurance business focused on people just above the poverty line who are unfamiliar with insurance sold through traditional agents and represent an untapped market. Developed the department. The initiative aims to identify and develop new ideas to address the needs of this underserved, but still lucrative, segment across multiple business lines.