Opinion

Sustainability ‘insured’

Hadi Riachi | Updated on February 25, 2021

Insurance industry’s ‘whole of society’ approach

It’s been a year since the outbreak of Covid-19, and the long-drawn-out path ahead will strain the world’s resources.

Governments need to replace short-term stimulus packages with sustainable strategies like the ‘whole of society’ approach.

In India, this approach is poised to play a pivotal role in bringing about radical reforms across key sectors. This is an opportunity to not just support a broad-based domestic recovery, but also leverage the country’s status as one of Asia's largest economies to play a leading role in the region’s development.

Pillars of recovery

A sustainable post-pandemic recovery must be supported by three key pillars:

Social reform: Well-designed policies and programmes that alleviate poverty, promote efficient labour markets and build risk protection help society prevent, manage and recover from adverse situations.

Digitalisation: Digital transformation will foster entrepreneurship, competition and innovation and better connect India with the world.

Infrastructure: Infrastructure development will increase productivity, connect cities and kindle capital investment.

As experts in risk management, the insurance industry can play an integral role in sustainable development by:

(i) closing health and mortality protection gaps,

(ii) ensuring the integration of insurance into a holistic digital ecosystem and

(iii) investing in infrastructure resilience.

The pandemic is expected to exacerbate the health and mortality protection gaps. Research estimates that households in India are the most vulnerable in Asia in this respect, with life insurance virtually non-existent, leaving over 80 per cent of protection needs unmet.

Three important forces urgently need to be prioritised to close this protection divide — awareness for insurance, and estate planning; enhancing access through digital platforms, and; initiatives such as Ayushman Bharat as well as public-private collaborations to ensure insurance affordability.

Targeting lower-income segments, bundling life cover with small premium riders and leveraging an omni-channel distribution approach are some of the other strategies insurers could adopt.

Harnessing digitalisation

The pandemic has accelerated demand for the seamless delivery of goods and services through digital channels.

Over half of consumers polled in an Asia-Pacific Covid-19 survey hope to see faster insurance claims processes and payments, processes that digitalisation can streamline.

Technology can also help anticipate and mitigate risks, and by matching solutions to these risks, help people live in a safer, more resilient world. For instance, the Risk Resilience Centre helps companies analyse previously fragmented data-sets to develop policies that enhance their readiness for health crises, from ensuring employee well-being to managing capital requirements.

The insurance industry plays a vital part in the global economy by providing protection against risks. The case for sustainability and collaboration has never been stronger.

The industry can help manage the impact of climate change by incorporating environmental, social and governance (ESG) criteria across investment portfolios and moving to ESG benchmarks in business operations; and by financing disaster risk mitigation and climate adaptation, which will strengthen the resilience of businesses, communities and societies for the long term.

The writer is Chief Executive Officer, India Branch, Swiss Re

Published on February 25, 2021

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