New research into inclusivity, diversity and commitment to social sustainability suggests that while some insurance companies are creating social impact and driving access to insurance, much more can be done to unlock the social value of the insurance sector as a whole - as well as building capacity to monitor and report on socially-driven insurance initiatives.
A new report from students at the Katie School of Insurance and Risk Management, which surveyed more than a hundred insurance companies worldwide, looked at insurers’ commitments to inclusive insurance, sustainable social initiatives and diversity and inclusion (D&I) within their own organisations.
Worryingly, nearly half the insurance companies analysed offered no microinsurance products and were not engaged with inclusive insurance at any level. On the plus side, however, Investigating the Social Component of Insurers' Sustainability Practices suggests that members of the three leading organisations in the sector - the MiN, the Insurance Development Forum (IDF) and UNEP’s Principles for Sustainable Insurance (PSI) - are collectively driving inclusive insurance in emerging markets. Perhaps not surprisingly, the findings strongly suggest that when it comes to developing and distributing products which create social impact, engagement in partnerships and networks matters.
Taking publicly-available information, the students analysed each company by asking three questions: is it engaged in any form of microinsurance activity; what social initiatives does it undertake or support; and what is it doing to foster inclusion and diversity both in its workforce and leadership?
A briefing note based on the original report shows that of the 117 insurers surveyed, 52 percent reported “some level of involvement with microinsurance”. All were members of the MiN, IDF or PSI, and in some cases belonged to more than one group, suggesting a common public commitment to pursuing social goals. Again, it is not entirely surprising the report concludes that MiN members are more likely to have ‘advanced’ microinsurance products in their portfolios, that IDF members are more likely to offer microinsurance, and that “it is clear that PSI signatory status matters in driving microinsurance involvement.” Overall, of the 117 insurers in the sample, 61 offered microinsurance products - mostly health, life, property, accident, vehicle, investing and agriculture, of which life and health were the most common.
In order to measure insurers’ commitment to sustainable social initiatives, the researchers explored whether insurers had reported activities in six proxy areas: risk management education; microcredit; general education; nutrition and water; women’s empowerment; and youth empowerment. Nutrition and water, and risk management education, were the most common areas for initiatives. The findings also suggested a correlation between being a PSI signatory and having “superior reporting in all the sustainable social criteria” and “a higher degree of social involvement.” Larger insurers - that is, the top 25 companies by assets - also scored well.
Turning to D&I within insurance companies, the students looked at engagement in D&I; specific types of D&I; and D&I in leadership. Gender, age, race, religion, ethnic origin, skill, disability, LGBT+, sexual orientation, culture, nationality and social status were all taken into account. For the leadership component, the researchers included executives, managers or board members who specifically represented the firm’s D&I initiatives.
It is concerning that, in an era of widespread CSR and ESG reporting - not to mention robust movements such as #MeToo and Black Lives Matter - nearly a quarter of all the firms analysed had no mention of any D&I initiatives on their website, in reports or press articles. While the insurance industry is not alone in grappling with gender inequality in the C-suite, there is still much work to be done in this regard. However, it is worth noting that members of the UNEP PSI performed well on D&I, as did the larger companies analysed.
What can we learn from Investigating the Social Component of Insurers' Sustainability Practices? Firstly, it seems size does matter: in general, the larger insurers perform better on D&I and social initiatives, although not necessarily when it comes to driving microinsurance. Secondly, those insurers who make a public commitment to social sustainability and development by joining the MiN, PSI or IDF also report well on social initiatives, suggesting the importance of collective effort and sharing experience, knowledge and business practices. In short, the whole becomes greater than the sum of the parts. Thirdly, commitment to microinsurance tends to go hand in hand with commitment to social sustainability and D&I. Finally, however, even those companies which make these commitments are not always good at monitoring and reporting results - making it challenging to evaluate progress and hold the industry to account.