Sea defence structure shot by drone

How to put purpose into action: five critical actions for insurers

Boards and the C-Suite can take action to guide purpose-led programs that extend beyond the pandemic response to help drive societal wellbeing and growth.

In brief

  • Making proactive changes now is preferable to making forced change in the future.
  • The growing emphasis on environmental, social and governance (ESG) issues requires insurers to show purpose in action.
  • A clear purpose can and should guide board-level and C-suite decision making.

In previous articles in this series, we’ve highlighted why purpose matters more than ever to the insurance industry. From its earliest days, insurers have provided protections against the greatest threats faced by individuals, families, businesses and communities. In 2021, the second year for the COVID-19 pandemic, society needs a high-functioning insurance industry. 

In an era of unprecedented change, widespread uncertainty and disruptive risks, a clear and actionable purpose is a powerful guide to both strategic planning and tactical decision making. Faced with the COVID-19 pandemic, increasing urgency relative to climate change and rising demand for racial and social equality, purpose statements provide a strategic compass for insurers to navigate forward.

Recognizing the need to move quickly and responsively to meet customer needs as conditions change, boards and the C-Suite can take specific actions to guide purpose-led programs that extend beyond pandemic response to help drive societal wellbeing and growth. Such actions are not “nice to have” PR exercises; rather, they represent important strategic change that can deliver value and promote growth in the near and long terms. Further, taking proactive steps for positive change in line with business objectives is a superior approach to working reactively once change is forced upon the industry, as it will be in several cases.


Chapter 1

Recalibrate your purpose

Individuals, businesses and society are looking for protections against new and evolving risks.

Alongside their peers in other sectors, insurance companies have generally been out front in committing support to customers in response to the pandemic. Most insurers have very prominent postings on their websites addressing COVID-19 and providing customers with help and information. Again, many executed impressive proactive outreach campaigns.

Insurers have also made high-profile efforts in response to 2020’s other big crises. They have expressed their support for minorities and reiterated their commitment to diversity and inclusion (D&I) in the wake of the Black Lives Matter protests around the world. In general, the industry recognizes the need for more regulation to address climate change and to demonstrate compliance with metrics defined by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) and Sustainable Finance Disclosure Regulation (SFDR) guidelines. 

Insurers have a vested interest in the rising importance of environmental, social and governance (ESG) factors and their influence over financial services products. Indeed, their emphasis on ESG during Q4 investor presentations confirms they understand its importance. Some large global insurers have already begun mapping their actions and priorities to the United Nations’ Sustainable Development Goals (SDGs). All of these are positive steps that regulators and investors increasingly expect and momentum will only increase in line with current trends.

Given the situation, it’s not surprising that most actions – including the industry’s many admirable efforts – have happened from the bottom-up or at the level of business units and functions. But the time has come for insurance C-suites and boards to map these efforts to their purpose statements in a holistic way, starting with 2021 board meetings. That will be a key step as they formulate plans to move forward, assess which issues will have the greatest impact on the business and its stakeholders, prioritize their actions and determine appropriate levels of budget. 

A more strategic and coordinated approach will help ensure more consistency of action across lines of business and geographies. Those actions may include increased flexibility with customers on premium payments (especially if pandemic-related unemployment benefits expire) and expediting claims pay-outs for policyholders.


Chapter 2

Develop processes and metrics to guide and monitor actions

Measuring the value and impact of purpose should be a top priority.

In our conversations with industry CEOs and board members during the last year, it is clear that purpose is top of mind. The most common question these leaders ask is, how to measure the impact? The key is to look beyond purely financial metrics and create models to guide decision making for the allocation of all forms of capital – including financial, human and political – and for tracking the effects of purpose-driven policies and actions. 

Even before COVID-19, there was considerable industry momentum in this direction. Due to shifting expectations of investors and consumers, insurers are more focused on ESG than ever before and are working to establish frameworks to guide decision making in these areas. The good news is that standards are beginning to emerge. The Embankment Project for Inclusive Capitalism (EPIC) developed a long-term value framework with metrics grouped around four essential focus areas:

  • Human talent
  • Consumer needs
  • Societal and environmental concerns
  • Corporate governance

The World Economic Forum’s International Business Council (IBC), a group of approximately 120 global CEOs, with the support of the “Big 4” consulting firms, proposed a common, core set of 22 metrics and recommended disclosures – organized around governance principles, people, planet and prosperity. The IBC’s model builds on the EPIC framework, with the goal of helping companies communicate how they create sustainable value and live their purpose.

These efforts are a starting point and useful in establishing standard measures. However, it will still be challenging to allocate budgets and deploy capital across many conflicting purpose-driven priorities and then apply these metrics to measure results. Most companies are at the early stages of developing these. But rapid maturation is possible and will probably occur as acceptance of stakeholder capitalism expands. Indeed, the first generation of projects has only recently been completed.   

The old truism that what gets measured gets managed will certainly apply as regulators and industry groups continue to push for increased disclosures on diversity and inclusion, corporate governance and climate change metrics. In tracking performance against purpose, insurers should aim to monitor the impact on value creation across the near, middle and longer terms and prepare to be transparent about their findings. Such reporting and transparency may provide consumers and markets a clearer sense of all that insurers have done and therefore could lead to increased customer loyalty, higher valuations and better share price performance.


Chapter 3

Engage to be part of the solution

Insurers should actively lead or participate in cross-industry and public-private partnerships.

Addressing the greatest societal challenges requires engagement and collaboration across the public and private sectors. Few, if any, industries will be able to make a meaningful impact without proactive support and creative collaboration with regulators, government authorities, non-governmental organizations (NGOs), the largest philanthropic organizations and other stakeholders.   

Certainly, the last few months demonstrate the ample benefits of proactive collaboration between governments and insurers. In the US, UK and other markets, discussions about public-private reinsurance programs are proceeding. Industry initiatives are exploring a range of future pandemic coverage options, including voluntary relief funds and public-private risk-financing mechanisms. Proposals in the US feature tailored solutions for small businesses and large and mid-sized companies. Working groups have been charged with moving from conceptual ideation to operational reality.   

The highest profile of these efforts is “Pandemic Re,” which was first launched in April as a steering committee and now has six working groups, supported by more than 50 volunteers from leading insurance brokers, insurers and reinsurers, management consultants, data modelers, the medical profession and academia. A further 65 organizations have volunteered to help. The biggest names in the industry are engaged, as they should be.  

These joint solutions recognize the fact that the scale of pandemic risk is far too large for insurers to take on themselves and that reinsurers are not wading in to cover risks that are effectively uninsurable. Such discussions as these will also be necessary if society is to prepare for the next pandemic, as well as address climate change, racial justice and income inequality. Being part of a solution to broad societal challenges may help protect the industry against negative media coverage regarding unpaid claims and restore consumer trust in insurance brands.


Chapter 4

Re-prioritize transformation programs to show purpose in action

Purpose should inform transformation strategies and investment decisions.

In insurance and other industries, the pandemic has accelerated many in-flight transformation initiatives, especially those related to process automation and digital interactions. To ensure adequate response to the demands imposed by the pandemic, many insurers moved quickly to streamline sales and service functions and enhance digital channels. They also accelerated claims processing. These quick and proactive moves benefited customers looking for more protection, faster claims resolution and answers to their questions. In other words, they demonstrated purpose in action.

These transformative efforts will continue to reshape customer engagement and the economics of the business, including:

  • Video consultations and online advisory sessions
  • Digitization of key operations, including distribution
  • Creation of new products and coverages for COVID-19
  • Integration of new data and findings into underwriting policies and procedures
  • Expedited claims handling and payments
  • The creation of digital health apps and other new tools

Looking ahead, purpose statements can be used as a lens to prioritize investments and activities, especially those that can address the issues and gaps exposed by the crisis. Future product innovation will be a priority, too, as insurers identify how they can provide coverage for some elements of pandemic and climate change risks. Developing simpler products that are easier for consumers to find and research and that map to current needs (e.g., flexible income solutions, more commercial risk prevention) are another way for insurers to fulfil that purpose. Participation in industry consortia is likely to be one part of the “new normal,” where once unthinkable risks comprise “business as usual.”  


Chapter 5

Support communities close to home

Good corporate citizenship is one way insurance brands can manifest their purpose.

While ESG has helped evolve notions of corporate social responsibility, good corporate citizenship can still make a difference. Whether they are extensively publicized or kept quiet, contributing to emergency funds, specific healthcare institutions and further pandemic research can go a long way to generating goodwill among citizens in need, who also happen to be policyholders. By serving as clear manifestations of purpose, they may also counter negative press and strengthen trust in insurance brands.   

The industry’s efforts to date have been very impressive and should continue. There’s a fine line between charitable community programs and efforts that support customers (e.g., premium holidays) and employees (e.g., enhanced mental health benefits and commitments to minimize furloughs). For most companies, community support will start with their own people and policyholders who have been affected by COVID-19. Planning for future community support efforts should also consider what those stakeholders expect relative to social justice, diversity and inclusion and climate change. 

The bottom line: meeting the moment to live its purpose

The insurance industry has never shied away from its awesome responsibility of protecting what matters most to individuals, families and businesses around the world. In the era of COVID-19, climate change and Black Lives Matter, living the industry’s historical purpose requires courage and creativity on the part of senior leaders and boards. 

There’s no doubt that insurers have a critical role to play in both helping the global economy recover and preparing society for future risks. As a whole, the industry responded effectively – even honorably – in the wake of COVID-19. Such purpose-driven action, which can take multiple forms, demonstrate how insurers can be – and must be – part of the solution to climate change, racial and social equality and other pressing societal issues.


On top of the COVID-19 pandemic, heightening societal focus on racial justice, climate change and economic inequality are reshaping both short- and long-term priorities for insurers. Organizations that are proactive in transforming can both live up to the industry’s purpose and spark innovation and growth.