COVID-19: What insurers need to know about purpose statements

As the crisis evolves, insurers must rigorously assess their purpose statements, which can guide actions, but also attract criticism.

Purpose statements have assumed increasing prominence on board agendas and within annual reports across the insurance sector during the past few years. Ideally, purpose statements create an organizational “north star” to guide corporate culture, shape operating principles and create competitive advantage through brand differentiation. Typically, purpose statements reflect the themes of reliability, security, confidence and living a better life. A sampling from across the industry shows the near universal appeal of what insurers claim to offer:

• We help people carry on with their lives, giving them peace of mind now and in the future
  
• To help people achieve a lifetime of financial security
  
• To help customers defy uncertainty and look to the future with confidence
  
• To help clients make the most of their money so they can achieve financial peace of mind
  
• To empower our customer to live a better life
  
• We provide you the confidence and control to be ready for whatever life throws at you

It’s clear that purpose statements are grounded in insurers’ historical role of protecting against future risks. That purpose goes back to the industry’s first days, providing money to families to bury fallen Roman soldiers. Supporting families, business and communities has long been part of the industry’s DNA. Clearly articulating that important societal role through formalized purpose statements would seem to be a very good thing for an industry that is often regarded with scepticism by many consumers.

Purpose statements are typically emotive and speak to benefits, such as peace of mind and personal security, seeking to convey the sentiment to policyholders, “we have you covered and we’ll be there during times of need.” However, what underpins the ability to deliver against these sentiments are models and decisions that drive what risks are covered vs. which are excluded. In the time of COVID-19, this clash between the rational and emotional is potentially explosive for insurers – especially those that have not carefully audited their purpose statements or thought through what they mean in terms of operational realities and actual customer interactions.