Public-private partnerships with non-traditional players and organizations are helping insurers close the protection gap.
“Public-private partnerships (PPPs) are not about funneling charity dollars to development projects, it’s about creating win-win business models with new partners in order to drive growth, reduce risk and drive innovation.” Gary Reader, Global Head of Insurance, KPMG International
The link between business and sustainability – economic, financial and environmental – continues to feature on the agenda of many CEO’s within the insurance industry. In fact, we see insurers increasingly come together with the worlds political, development, and policy leaders to help respond to many of the world’s most pressing challenges such as climate change,disaster resilience, and economic stability.
The reality is, few sectors are as exposed to the risks of these macro-trends as the insurance sector is. And while the industry has a fundamental and central role to play in the global response to these issues, no one expects them to shoulder these challenges alone. Many of the world’s leading insurance groups are already taking significant steps in forming and activating important partnerships. Since 2012, more than 70 insurance organizations have adopted the UNEP (United Nations Environment Program) finance initiatives for sustainable insurance; and others are forming PPPs aimed at building disaster-resilient communities and economies. At the 2015 World Economic Forum in Davos, a consortium of leading insurers and reinsurers launched a collaborative micro-insurance incubator with the intention of launching 10 new insurance ventures over the next 10 years to alleviate financial pressure in emerging markets and drive global insurance penetration.
While there are certainly altruistic benefits to entering into partnerships to solve some of the world’s greatest human, environmental and economic challenges, PPPs are driven by much more than Corporate Social Responsibility objectives. Ultimately, we see three main objectives being fulfilled:
Identifying, cultivating and participating in partnerships requires organizations to think differently about the world in which they operate. Yet,our experience and data from a recent survey conducted by KPMG International suggest that insurer’s struggle to drive innovation through their business models, products and partnerships. Creating the right environment for innovation will be key to success in this new era of collaboration.
Recognizing these challenges, and through extensive interviews with mature players, start-ups and disruptive challenges, it is clear that making PPPs work will require insurers to think differently. We believe that culture is key to creating successful PPPs; those insurers with a culture that is flexible, adaptable and open to experimentation will be better placed to have positive influence on PPP adoption and drive improved results from their partnerships.
In addition to the public-private partnership conversation, KPMG International is examining innovation in its broadest sense – to harness emerging technologies, to reach a whole new generation of clients, to respond to disruption from outside the industry. After surveying more than 280 industry executives from 20 countries, and interviewing many global industry players and start ups, it is abundantly clear – to remain competitive, innovation will need to become part of an insurers organizational DNA.
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Gary Readers speaks to World Risk Insurance Network on the benefits of public-private partnerships.