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1、OCTOBER 2023The Social Impact Opportunity in InsuranceMany types of stakeholders are paying more attention to social issuesSources:BCG BrightHouse;expert interviews;BCG analysis.Note:ESG=environmental,social,and governance.CustomersTwo-thirds of consumers are planning to make more sustainable or eth
2、ical purchases in the short termEmployeesCurrently,two-thirds of Generation Z and millennials(which together will make up 75%of the workforce by 2030)expect their employers to have purpose and their jobs to have societal impactStandard settersCompanies are voluntarily working together to develop sta
3、ndards for addressing social issues,especially in ESG areasLegislatorsGovernments are introducing legal requirements for companies to disclose their performance on social issues InvestorsInvestors are increasingly considering companies social impact commitments in the decision-making processCompanie
4、sCompanies are pushing suppliers to comply with standards for addressing social issues to mitigate reputational riskInsurers can unlock measurable business value by improving their social impactSources:Swiss Re Institute,Resilience Index 2021:A strong growth recovery,but less resilient world economy
5、;Refinitiv;MSCI;BCG analysis.Note:ESG=environmental,social,and governance.1MSCI defined ESG leaders as those in the top 20%of its ESG scores and laggards as those in the bottom 20%.2BCG-The Network survey,2021.3Geneva Association,The Role of Trust in Narrowing Protection Gaps,2019.Increase revenue a
6、nd the number of new market opportunitiesThe global insurance-protection gap for health,mortality,and natural-catastrophe risks reached$1.4 trillion in 2020Boost total shareholder returnESG leaders outperform laggards by about 4%per year1Become a more attractive employer and increase retentionA 10%i
7、ncrease of purposefulness at work can reduce employee turnover by 8.1%2Improve the companys reputation and gain trustAn increased level of trust in insurers would encourage additional insurance purchases3Across business lines,most survey respondents say that financial inclusion and financial well-be
8、ing should be prioritiesSource:BCGs Social Impact Opportunity in Insurance survey.Note:P&C=property and casualty.1Reflects the expected increase or decrease in importance.The percentages were determined by comparing companies current focus with their forward-looking outlook over the next three to fi
9、ve years,as rated by the respondents.Which social issues do you think insurance companies should prioritize?RESPONDENTS WHO RANKED THE ISSUES AMONG THEIR TOP THREE CHOICES(%)Financial inclusion and financial well-beingDiversity,equity,and inclusionHealth and safetyHuman capital developmentHuman and
10、labor rightsP&C retailP&C commercialand reinsuranceLifeHealthInvestment andasset managementThree-to five-year outlook736375720322140+32%+7%+25%+15%3%Most insurers still struggle to quantify the business value of social impact programs and,therefore,focus primarily on
11、 reputational benefitsSource:BCGs Social Impact Opportunity in Insurance survey.What do you think are the main barriers to successfully addressing social issues at your company?RESPONDENTS TOP THREE BARRIERS(%)What do you believe are insurance companies primary reasons for addressing social issuesRE
12、SPONDENTS TOP THREE REASONS(%)Difficulty quantifying business valueDifficulty quantifying social impact or valueLack of internal skillsLack of internal buy-inBudgetary constraintsOrganizational structureOther77Reputational benefitsCompany purposeAttracting talentRegulatory scrutinyCompeti
13、tive pressureMarket expansionAttracting investmentsIncreasing stock valueImproving profitabilityOther766457Sources:Expert interviews;BCG analysis.Note:DEI=diversity,equity,and inclusion.Insurers social impact ambitions tend to fall short for several common reasonsDiffused ownershipOwnersh
14、ip of the social agenda is often spread across the organization,with no leader centrally accountable for resultsMismatch between priorities and current maturityMost insurers say that financial inclusion and financial well-being should be priorities,but the companies are stronger on DEI and human-cap
15、ital initiativesFragmented approachMany insurers have scattered social initiatives with narrow scopes and few measurable targets,and companies often dont integrate the initiatives into an overarching business strategyFocus on employees and communityInsurers are more likely to support social programs
16、 that help employees or the communityfor example,having initiatives that gather donations or organize volunteersrather than programs to aid customers Source:BCGs Social Impact Opportunity in Insurance survey.Across social impact issues,insurers are more mature on human capital development and DEI th
17、an they are on a just transition and financial inclusionSocial impact strategyGovernance and organizationExternal engagement and advocacyReportingFinancial inclusion and financial well-beingHealth and safetyHuman and labor rightsHuman capital developmentDiversity,equity,and inclusionLowVery LowMatur
18、ity levelMiddleHighVery HighInsurers maturity level for customer and business partner initiatives is lower than it is for investor programs;insurers maturity level is high and very high for community and employee initiatives,respectively Just transition and climate justiceMost insurers are at the mi
19、ddle maturity level regarding their social impact strategy,creating an opportunity for those that can improveSource:BCGs Social Impact Opportunity in Insurance survey.Note:Because of rounding,percentages do not add up to 100.BeginnerEvolvingEstablishedLeaderPioneerHow mature is your companys social
20、impact strategy?No overarching social agendaA few scattered initiatives are implemented,most are aimed at boosting the companys reputation and employees engagementNo cohesive social impact strategyOpportunistic,targeted business initiatives are in place,but they lack a cohesive strategy and thematic
21、 selection,and few stakeholders are involvedSocial programs are integrated at scaleA strategic approach to social impact has defined goals,at-scale initiatives,and a solid business caseA social agenda is a core driver of the enterprise strategyA social agenda is a central pillar of the business stra
22、tegy;the agenda calls for at-scale initiatives and clients and suppliers are actively engagedA social impact strategy is a competitive advantageSocial impact is an engine of growth and a defining attribute;the company helps shape the industrys social agenda as well as the agendas of clients and supp
23、liers value chains19691300COMPANIES(%)Insurers spread ownership of the social agenda across the organization,with no leader accountable for results,and many limit their use of incentivesSource:BCGs Social Impact Opportunity in Insurance survey.Note:ESG=environmental,social,and governance.Which depar
24、tments have the primary responsibility to deliver your companys ambition on social issues?RESPONDENTS TOP THREE CHOICES(%)Does your company incentivize functions to achieve social targets?If so,which functions?RESPONDENTS(%)Human resourcesESG unit or sustainability leaderBusiness linesStrategyFounda
25、tion or philanthropic armOtherMarketing and communicationsOperations and supply chainLegal8313No incentivesTotalIncentives only for the operational functionsIncentives for the operational and business functionsLife insurance and asset management are more mature in terms of fina
26、ncial inclusion,while P&C and health have room for improvementSource:BCGs Social Impact Opportunity in Insurance survey.Note:P&C=property and casualty.Because of rounding,percentages do not add up to 100.How mature is your companys social proposition on financial inclusion?14%39%32%16%All business l
27、ines15%46%23%15%P&CLowMaturity levelMiddleHighVery High16%31%31%22%Life and asset management14%57%14%14%HealthInitiatives are often tracked,but they are not included in the overarching business strategyInitiatives are highly integrated into the business strategyTo improve financial inclusion,leading
28、 companies apply a systematic approachSources:Expert interviews;BCG analysis.Target setting Extensively analyze a market to identify potential customers for whom affordability is borderlineIdea generation Assess how to meet prospects needs by adjusting product attributes(such as distribution and pri
29、cing)Business validation Build a high-level operating model and business caseProduct rolloutCreate a detailed target operating model and launch a minimum viable productDistribution:Make products available in retail settings and use a diverse sales networkPayment:Let customers easily switch monthly p
30、ayments on and off Offering:Provide speedy claims reimbursementAdditional services:Couple an insurance policy with an interest-bearing savings accountEXAMPLESSuccessful financial-inclusion initiatives often require adjusting current products,rather than creating new onesThe energy transition can als
31、o affect vulnerable populations,but most insurers arent taking steps to address the negative effectsSource:BCGs Social Impact Opportunity in Insurance survey.Is your company accounting for the potential adverse social impacts of its climate transition projects?We do not account for themNo management
32、 of the adverse social effects of the green transitionWe aim to avoid significant harmIdentify and avoid activities that have a significant negative impact on fundamental social rights We mitigate unavoidable externalitiesIdentify potential adverse social impacts and set up compensative actions to n
33、eutralize the effectsWe create positive impactAchieve a substantial positive social impact by designing environmental strategies together with social strategies38311219COMPANIES(%)Leading insurers apply the just transition concept along their entire value chainSources:Expert interviews;BCG analysis.
34、InvestmentsUnderwritingOperationsSupply chain Thematic funds that are tailored to include companies that ensure a just transition along with strong financial returns Stewardship program to educate companies and support them in undertaking a just transition Natural-catastrophe risk products that are
35、bundled with additional services to enhance resilience and protect vulnerable populations Income-protection products,created in partnership with corporations and governments,that secure a smooth transition for industries impacted by climate change Upskilling and reskilling practices and advisory ser
36、vices to shift toward greener underwriting and investment practices and protect employees from job loss Partnerships with nongovernmental organizations to offer financial and workforce support for disaster relief activities in response to natural catastrophes Partnerships with external tech provider
37、s to deploy tech solutions that can remotely assess claims in case of extreme catastrophic events Dedicated platform that provides suppliers with climate transition support,such as information on navigating government subsidies and reporting practicesMost insurers track and report input metrics,but
38、far fewer track and report their overall impact on society or business performanceSources:Expert interviews;BCG analysis.Note:Because of rounding,percentages do not add up to 100.1Example of a metric that companies measure.What is the scope of social impact reporting at your company?RESPONDENTS(%)13
39、3InputsOutputsImpactBusiness metrics20TotalNo social metrics in placeSocial metrics in placeAmount invested in upskilling program1Number of people participating in a program1Reduction of regional pension gap1Sustainability return on investment1To improve reporting,insurers should adopt a
40、balanced mix of metrics that covers all phases of an initiative,from input through impactSources:Expert interviews;BCG analysis.InputOutputOutcomeImpactScopeComplexityExamples of social metricsPlanned activitiesIntended resultsInvest financial,human,and material resources Requires strong business sy
41、stems,including ones in finance and human resources Difficult to obtain data when many organizations are involved Needs a well-established tracking and reporting system Some interventions may not have a direct,easily measurable output Requires a tracking and reporting system that can measure outcome
42、s One intervention can have multiple outcomes Evaluate the results in terms of what would have happened otherwise Difficult to identify counterfactual situations Amount invested in initiatives for community engagement Number of full-time equivalents working on social initiatives Number of people rea
43、ched by interventions Number of people participating in upskilling program Number of people who increased their savings by a certain percentage Share of women on the board of directors Reduction in the natural-catastrophe protection gap Decrease in the gender pension gapDirect deliverables and activ
44、ities that result from the investmentAchieve results for the target groupAssess the outcomes relative to counterfactual situationsEasier to measure,but reveals fewer insightsHarder to measure,but reveals more insightsBest practices to build a stronger social agenda for insurersSources:Expert intervi
45、ews;BCG analysis.1Prioritize and set a strategyIdentify two or three social issues that are explicitly linked to the companys overall strategy and purpose,factoring in organizational challenges and strengths,along with a deep understanding of the customers needs.2Set clear accountabilityMove beyond
46、the current,scattered ownership for social initiatives.Make one leader and a team explicitly responsible for the companys overall social agenda,and give them control over the associated budgets and incentives.3Empower businesses to actDevelop new offerings that target social issues,and develop busin
47、ess plans that apply a longer time horizon to reach profitability,compared with that of traditional products and services.4Tailor projects to the needs of local markets and customersFactor in the socioeconomic context and regulatory landscape when designing social initiatives,making modifications to meet the needs and requirements of local markets.5Measure and reportShift from reporting on activity toward a balanced set of input,output,and impact metrics,and report the companys overall performance to stakeholders.