As the full extent of the pandemic started to become clear, some companies turned to their creditors for guidance; others turned to the government. Insurers turned to their purpose.
According to a recent global survey of Insurance CEOs conducted by KPMG International, three-quarters of Insurance CEOs say their purpose provided them with a clear framework from which to make quick and effective decisions. Eighty-two percent say their purpose helped them understand their stakeholders' needs during the pandemic. More than half report they let their purpose dictate their stakeholder response.
The great news for the insurance industry is that - at its core - insurance has a noble purpose. Our focus is on protecting people, businesses and communities in times of need. And that provides a 'halo effect' that forms a strong foundation for purpose.
To be clear, 'purpose' is not created through value statements or codes of conduct; it is not something that gets pulled out for show once a year; it is not a corporate social responsibility (CSR) initiative or media opportunity. Purpose is about standing for something bigger than your business - it is your reason for existing, your vision for the future. Perhaps most importantly, it is your guiding light and the first lens through which you make your decisions.
Examples of insurers being guided by their purpose were everywhere during the initial phases of the pandemic. For example one insurer in Asia who handed health authorities a proprietary digital health platform they had been developing for years because they knew it would help doctors connect with patients in remote locations during the lockdown. Many insurers have waived the cost of COVID-19 testing and treatments, particularly for those in lower income brackets.
In the auto insurance space, some insurers have handed premiums back to policyholders to show they are putting customers first, and to reflect the fact they are driving less and, therefore, less of a risk. Property and commercial lines insurers quickly adjusted their claims processes and implemented new tools to help customers move through the claims process quickly and virtually (or, in other words, safely).
I've been particularly encouraged by insurers that are making sure their purpose remains activated throughout their employee population. The reality is that employees are facing many of the same challenges as customers - women, in particular, have been disproportionately impacted by the pandemic on the home front. Purpose-led organisations are redoubling their efforts to drive diversity and inclusion at this time.
In my conversations with CEOs, purpose is a trending topic. I don't mean that they are just discussing it because it is popular, in fact, I find the depth of the conversation very energising. Tone at the top seems right in many organisations.
So, where does purpose tend to fall apart? I see it most when the 'tone in the middle', either by words or actions, does not reflect the messages at the top. It often comes down to culture, to the heart of the organisation. Leading CEOs understand this and have shared some of their top tips with me including:
Finally, there is a discussion in the industry right now about how to connect incentives better to ensure the right behaviors are being rewarded. This is an important and evolving area but I have no doubt this will get more attention in the months and years ahead.
Purpose isn't a 'nice to have'. It is essential to operating in today's environment. Previous research by KPMG International shows that both millennials and baby-boomers are already rewarding truly purpose-driven brands and are often willing to pay a premium for their products and services Me, my life, my wallet, KPMG International, 2018. Particularly in times of crisis, consumers are more likely to rally around a brand with purpose.
There is also a mountain of data that shows the value purpose can deliver to the top and bottom line. Brands with a clear purpose and a positive impact on people's lives grew 2.5 times more than those with a low perceived impact. Meaningful retail brands also report higher returns on their key metrics - almost triple the purchase intent in non-customers and more than double the repurchase intent for existing customers.
Simply put, a strong purpose can create a virtuous cycle that leads to higher-value growth, better customer loyalty and a stronger brand reputation.
It should come as no surprise, therefore, that nine-in-ten (90 percent) Insurance CEOs now say they are re-evaluating their purpose in light of the COVID-19 experience. Some will be looking to make tweaks and adjustments to reflect the new reality. Others will be looking to ensure their purpose is fit for purpose across a wider range of potential scenarios (in good times and bad times).
Many, however, will be taking a second look at not just the wording and meaning of their purpose, but how they activate it and embed it across their organisation and throughout their decision-making process. They want employees to take purpose out of the drawer and place it firmly in the middle of their desks.
Sadly, there are no silver bullets for activating purpose. But of this you can be sure: it will never happen unless employees understand it and buy into it. Only then will purpose become the lens through which the organisation makes its decisions. And only then will it start truly delivering value.