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Insurance sector key to Australian innovation

June 28, 2017

Insurance companies like IAG – a founding member of the Shared Value Project – are recognising that they can help boost Australian productivity by increasing their focus on shared value, according to new research released this week by FSG and the Shared Value Initiative in collaboration with international insurers Discovery, IAG and Skandia.

The report, released in Australia by the Shared Value Project, describes the insurance sector as the ultimate shared value industry, with insurers enabling individuals and companies to be more innovative and productive by giving them the support they need to handle risks.

Using examples from pioneering companies around the globe ‘Insuring Shared Value: How Insurers Gain Competitive Advantage by Better Addressing Society’s Needs’ presents the case for insurers to pursue a shared value approach. The business strategy aligns core profit making activities with the pursuit of large scale social impact to create, for example, more resilient and insurable cities or prevent ill-health in target population groups.

“Australian insurance companies are leading the world by embedding shared value into their organisational strategies, and this research demonstrates the impact their shared value programs are having on the system as a whole. We’re seeing positive outcomes for the companies who implement the strategy, the customers who use the new products or processes, and the broader community who are part of a healthier and safer society,” Helen Steel, Executive Director of the Shared Value Project said.

The research uncovered three major opportunities for insurers to create shared value aligned to the role of insurers as risk manager, risk carrier, and asset manager:

  1. Prevent risk and dynamically reward risk reduction
  2. Close the protection gap for the underserved
  3. Invest assets in prevention and protection systems

“We have been an early adopter of shared value and see it as a key enabler for our business strategy,” Ramana James, Head of Group Shared Value for IAG said.

“The Insuring Shared Value report is a valuable tool for insurers because it not only evaluates the current state of play but also explores the future opportunities to grow shared value in Australia through partnering and innovation. Protecting customers from risk is at the core of insurance. We have seen first-hand how shared value can be used to improve safety and address social issues while driving more effective business outcomes at the same time.”

Another founding member of the Shared Value Project, AIA Australia, an Australian partner of Discovery, has been using Vitality to improve health outcomes among their Australian customers through incentivising healthy life style choices. CEO AIA Australia & New Zealand Damien Mu said, “As a business which assists claimants and their families financially when they are at their most vulnerable, we saw trends developing in increasingly poorer health outcomes for Australians resulting in claims. We wanted to take a proactive approach to improving these situations – not only for us as a business, but for our customers, partners and society”.

The research also identifies global trends affecting society and the environment, and explores the probable impact on the most common insurance business lines with five high-potential themes emerging as innovation hot spots for insurers covering working lives, ageing, urban living, disaster resilience and rural living.

Using creative approaches to systems change, behavioural economics, use of data and new technology, and engaging with government and communities, the insurance sector can move from a passive guardian to activist model where companies anticipate, prevent, and mitigate social risks.