The past year has altered our lens on many aspects of work and life, including sustainability. For insurers, sustainability evolved beyond altruism into a new business imperative.
There are both external market forces and internal culture forces elevating sustainability items on the insurer’s agenda. Insurance carriers are responding to pulls in the market relating to changes in risk. And they are simultaneously responding to internal pushes from their own leadership and workers who want to address environmental and community challenges.
The market is pulling insurers toward sustainability
One example can be seen in the fundamental changes now happening in the energy sector. We are seeing many more enterprises focus on renewable energy. In response, insurers are creating products and services to support those players. Meanwhile, insurers are making key portfolio changes that would minimize their exposures relating to fossil fuels.
We see a similar market pull in consumer demand. In our Insurance Consumer Study 2021, consumers expressed interest in offers that promote sustainability. More than half (57%) of consumers say they would find advice on how to travel and shop more sustainably appealing when offered by their insurer or bank. Among Millennials and Zoomers interest was even greater (67%).
This presents personal lines insurers with an opportunity to demonstrate that sustainability is a shared value. As insurers are reimagining insurance post-COVID, they can (re)build trust with organizational purpose and a commitment to Environmental, Social and Governance (ESG) targets.
The internal push toward sustainability
Insurers are now looking to build sustainability value into their business models, product portfolios, and the communities in which they live and work. These initiatives are driven by a shift in mindset. While internal KPIs, such as reductions in carbon footprint, will continue to be important, ESG-driven initiatives can go much farther.
Insurers can set sustainability targets that help generate revenue while reducing costs and building deeper relationships with their customers and communities. Intelligent insurance operations can help align underwriting to ESG criteria. Products offering protection for under-insured groups can be scaled. And products designed to promote the wellness and longevity of aging populations can help delay the need for disability and long-term care claims.
Sustainability is endemic to the insurance industry
The reality is that insurers have long linked sustainability with profitable growth. The nature of insurance requires companies to understand complex risks and to operate with a long-term mindset to monitor and address risk. However, there is always room to improve ourselves and the world around us.
Here in the Northern Hemisphere spring has arrived. We think of this as a time of renewal and growth. May that be true for us all as we seek new solutions to our biggest global challenges.