Purpose is a strong potential differentiator for insurers. But, since the pandemic, the industry has experienced an erosion of consumer trust and confidence. Repositioning as a force for good is how the industry can win back consumer trust.
Consider how new life insurance offerings, along with new pensions regulations and standards, could help bridge the huge retirement savings gap in various markets around Europe. Life insurance products are evolving to reflect market demand for financial wellness and security, as well as the efforts of wealth and asset managers to develop more holistic solutions.
Embracing the industry’s higher purpose can inspire carriers to address other protection gaps, particularly those related to climate change and cyber. Large commercial insurers and reinsurers can play a critical, catalyzing role in the shift to a more sustainable economy by serving as financial risk management partners for energy firms undergoing the transition to green operations and energy sources. Similarly, developing coverage for intangible assets (e.g., patents, intellectual property, software) – which are estimated to represent up to 80% of overall value on corporate balance sheets and are mostly unprotected by insurance today – is another opportunity to achieve profitability with purpose. Indeed, insurers would do well to view the huge protection gaps as high-priority growth opportunities.
Both risk protection products and risk engineering services (as well as educating clients and the general public) contribute to a more purposeful go-to-market approach. The industry has deep and broad knowledge of what causes both individual and commercial losses; purpose can provide the impetus to design new products that reflect how people live and businesses operate today. Such forward-looking, market-facing steps will have a bigger impact on brands and growth strategies than narrowly focusing on adding more riders and further restricting loss terms within standard policy language.
In personal lines, the path forward starts with simpler products, richer experiences and increased personalization and flexibility. In digitizing the customer journey, carriers must resist the temptation to prioritize cost savings over service enhancements. To become true digital leaders, insurers must explore ways to automate and digitize their core value proposition, embedding risk prevention and engineering services directly into the structure of protection products and within routine interactions (e.g., renewing policies, submitting claims). Further, by deeply embedding risk prevention within customers’ lifestyles or in the everyday operations of commercial customers, insurers can put their purpose at the heart of the business.
Insurance can – and should – be the most purpose-led industry on the planet, the first sector consumers think of when they think of protection, security and confidence. That’s not the case today. Any insurer that can restore some of that shine to their brands will gain an advantage in competing against other non-traditional players that have entered the insurance space.
Key actions for senior leaders and boards:
- Examine how your purpose aligns to changing customer needs and shifting market dynamics
- Define the right metrics to monitor the execution of ESG strategies and communicate progress to stakeholders
- Identify specific actions to embed purpose in operations and specific product features
- Engage partners in ecosystems to support more holistic solutions, service bundles and a broader range of products
- Expand and enrich data management capabilities with the goal of generating insights to personalize every experience and interaction