(Insurance News Net) - Environmental, social and governance initiatives have been around for nearly two decades, and it has taken about that long for organizations across the globe to become increasingly focused on improving their ESG practices. Although the life insurance industry is no different, it has made significant strides in the last few years.
In a recent survey, 41% of U.S. life/annuity and property/casualty insurers incorporated ESG factors (e.g., how to reduce paper, improve automation and scale sustainably) into their business practices in the last year, and 79% have done so within the past two, a Conning survey showed. To continue this trend, life insurers must be creative in how they champion ESG as the industry and world evolves.
Scaling sustainably is the goal
Life insurance data, which goes back many years, has led to how the industry currently prices policies. That legacy data is needed, but it keeps the industry stuck in legacy processes, which can be counterproductive to ESG values.
Our greatest challenge when it comes to sustainability? Life insurance companies must provide the same service they’ve provided for years but life insurers must learn to do so in a more streamlined, efficient way. This means evolving to become more digital and reducing manual processes so we can continue to scale sustainably.
What life insurers can do to champion ESG
When people think ESG, they often think big: climate change, deforestation, air pollution, etc. Insurers don’t have the ability to directly combat those large-scale issues, but they can evolve the process-driven work they currently perform into more modern, sustainable practices.
Here are three ways to think about sustainability through a life insurance lens:
- Use the cloud — Insurance companies use a lot of legacy mainframe technology, which is inefficient and costly. Moving to the cloud uses less electricity and ultimately is better for business. The industry slowly has been adapting to new technology, such as shifting to automating the underwriting process, but many carriers still use paper-based processes. The industry has digitized to a great extent in its consumer-facing activities, but if digital tools were more widely available and used internally, it would increase the company’s overall sustainability.
- Reduce home visits —The less you travel, the smaller your carbon footprint. By using more external third-party data instead of physically having to go to the pharmacy, labs or someone’s home, you can reduce your carbon footprint and underwriting will become more efficient. Electronic health records hold important information such as blood pressure and body mass index, and travel is not required to transmit that data.
- Update legacy systems — If someone applies for a life insurance policy within a legacy system, it calls around and you receive a PDF. Underwriters are often printing that PDF, scanning it into another system and uploading it. That’s both time-consuming and a waste of paper. You have an opportunity to streamline processes by going fully digital.
Changing your mindset is the first step
Sustainable practices don’t have to be overwhelming. In fact, their whole objective is to reduce the burden of manual processes and increase the amount of valuable service insurers can provide. As the industry evolves, a proactive, positive mindset about the role you can play in a more sustainable world will pay dividends later.
By Samantha Chow
February 22, 2023
Samantha Chow is vice president, global life, annuity and health sector leader at Capgemini.
