Someone asked me the other day why I’m so excited about the mission behind RGA’s approach to Environment, Social and Governance (ESG). I admit I may have been going on a little too enthusiastically about a subject that fuels much of my motivation to work in the life insurance industry. Though that motivation wasn’t something that I necessarily had always been aware of, it was always there. There may be a fine line between hopeful and excited, so let me tell you what I see: the “S” right in the middle of ESG, which stands for “Social”, but in my mind can also mean "superpower".
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To me this represents the very heart of what we are about as a (re)insurer and the roots of what our industry is about: caring for those around us. Helping each other out. We exist because people have a need for security, and as much certainty as they can find in a volatile, uncertain, complex and ambiguous world. While many may consider insurance as being mild-mannered and uninteresting (like a certain superhero alter ego), or a necessary evil, I see the superpowers of insurance every day and I can attest to just how important these are to society. I also can't help but remember that "with great power comes great responsibility."
"I believe we are on the verge of a great shift where these powers can do more good for more people than has ever been done or thought possible before."
This view of the future is informed by knowledge of the past. Lloyd’s of London got its start because shipowners wanted to share around the risks inherent in moving valuable cargos across vast, turbulent oceans. They knew that harm to any one ship was never too far away, yet if they pooled risk, they could all benefit from this protection. From humble beginnings in a coffee shop in London, the Lloyd’s association developed a successful approach on how to limit the catastrophe of losing a ship; by adding this element of certainty, outside investors were encouraged and the activity turbocharged the commerce of the day. Hence, the wonders and goods of an expanding world began to arrive in England. The system generated tremendous amounts of generational wealth for some, but it also drove all manner of businesses, trades, and many livelihoods. And so modern insurance was born.
The early mutual aid associations formed by communities and guilds were another way of sharing risks for the greater good. There was also something known as “industrial insurance” where agents would roam the tenements housing industrial workers, selling life and disability policies of relatively low amounts, at relatively low premiums. The approach was woefully inefficient, but even then, there were attempts to recognize the need and the desperation in society. In fact, you could say that the “protection gap” has existed since the time the first insurance policy was written.
I say all of this to remind us of how insurance undergirds the prosperity of society, but also call attention to the progress we are making in pushing back against catastrophe and uncertainty. Historically it has been assumed that the ones with the most to lose were also the ones most interested in reducing that uncertainty. But in very real and crushing terms, the loss of a laborer’s small income due to death or injury was as devastating to that family as the loss of a ship to a merchant or the failure of their business.
Today, however, we have the tools and perspective to reduce uncertainty to an unprecedented level of participation. This is what excites me so much about the “Social” of ESG. RGA has always been at the forefront of gaining a better understanding of the risks that face us all, and in innovating to provide more people with access to insurance coverage – at value for money price points to consumers and profitably to capital providers.
Not only that, but I look around and see that there is so much potential for more. Over the last decade we have partnered with funds such as LeapFrog, investing in businesses that provide healthcare and financial tools even though 250 million of its customers are considered to be living at the bottom of the income pyramid. BIMA, one of their portfolio companies, is the leading provider of mobile-delivered insurance, underwriting millions of low-income people with affordable life, personal accident, and health microinsurance products. Our own portfolio company, Inclusivity Solutions, is driving insurance impact by partnering with financial institutions, such as RGA, local insurers and banks, as well as mobile operators in emerging markets.
We are in a position to not only reduce the protection gap, but the expectation gap as well – the ability to hope and believe in a prosperous future – by lowering social barriers and creating access. Insurance is a superpower; let’s use it for good.
As Superman once said, "There is a superhero in all of us; we just need the courage to put on the cape."
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