Virtual Summit Shorts: Establishing meaningful stakeholder engagement to ensure effective insurance solutions

The concept of fairness with respect to the provision of insurance for consumers is subjective. What constitutes as a fair product? How easy is it to achieve fairness for all stakeholders involved? These are some questions that actuaries must consider in order to foster meaningful engagement and trust between the consumer, industry and all other relevant parties.

Ideally, fairness should be integrally ingrained within the processes of any industry; however, it is remarkable how little consideration has been given to fairness in insurance to date. The premise of insurance is a safety net that you may never utilise, yet one you continue to pay premiums for. This may not seem fair in the eyes of some. Let’s take it one step further.

Consider property insurance, whereby there have been numerous occurrences of people moving up the street or even changing floors within the same apartment building, just to be greeted with a shocking increase in their premiums.

At the face of it, this also may not seem fair in the eyes of the consumer. The level of granularity considered in today’s pricing methodologies along with the tools available to price more accurately have assisted insurers greatly in their risk quantification processes, but perhaps not enough light has been cast on these processes, so that fairness can be assessed and appreciated by all stakeholders.

The speakers note that it is time compromises must be made so that insurers are thinking about their customers, so united fairness can be achieved. Insurers must focus on managing the claims cost and meeting community expectations, whilst balancing the needs of shareholders and reinsurers.

Furthermore, education into fairness must be spread across the stakeholder spectrum, in a way such that the industry can stop solely focusing on profit generation and start delivering on consumer needs in a sustainable fashion.

Ultimately, progress must be initiated from the top; in this case the Board. These are the individuals who should question whether their insurance solutions are fair, and if not, how can this be achieved rightly. The speakers summarise such efforts as:

• from a consumer point of view: insurance should be sustainable in a way that they are affordable, available and meet consumers’ actual needs such as coverage; and
• from the industry point of view: insurance needs to continue to provide profits for the insurer and be financially sustainable within the business line or scheme.                                                                                                                            

The speakers note some questions for the Board in terms of integrating fairness:

• is the product leveraging the tools of the 21^st century, including innovative techniques, data analytic opportunities to provide the best impact for all?; and
• does the culture around the company and brand exude that of customer-centricity, or is this merely a word that is plastered to its reputation?                                                                                                     

I would like to thank the speakers for their time and effort in delivering such an engaging session.

CPD: Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.