Category Archives: Corporate Social Responsibility

A Spring Break Insurance Tale

Turns out it’s hard to escape insurance, even on spring break.

A visit to Singer Island, Florida led to an interesting discovery.

We were taking a walking tour in John D. MacArthur Beach State Park. This 438-acre park is the only state park in Palm Beach County and located between the Atlantic Ocean and Lake Worth Lagoon.

Think nature trails, hammocks (the forested kind), tropical trees with names like strangler fig, beach, sand dunes, rare turtles, and birds, lots of birds: osprey, cormorants, gulls and pelicans.

Right outside the nature center is a bust of the previous property owner, John D. MacArthur. Our tour guide happened to mention that Mr. MacArthur made his fortune in the insurance business.

JohnDMacArthur

Apparently, in 1935 Mr. MacArthur acquired the Bankers Life and Casualty Company of Chicago for $2,500 ($44,000 in today’s dollars).

As our tour guide explained, during the Great Depression people didn’t have the money to buy insurance. So Mr. MacArthur came up with a plan to make it affordable. He would charge them $1 (that’s $17.65 in today’s dollars) for a life insurance policy.

There was just one caveat: for the policy to pay out, a person had to die of unnatural causes.

Needless to say, Mr. MacArthur was very successful. Five years later, Bankers had more than $1 million in assets and by 1977 more than $1 billion.

At the time of his death in 1978, Mr. MacArthur’s insurance companies had more than 3 million policyholders, with $5.5 billion of insurance in force and a sales staff of more than 5,000 agents and brokers.

In addition to insurance, Mr. MacArthur had an interest in real estate and development and his holdings included 100,000 acres of land in Florida, mostly in the Palm Beach and Sarasota areas.

Mr. MacArthur later donated a section of his Palm Beach property for use as a public park after a university study convinced him it was a biological treasure.

The MacArthur Foundation (established in 1970 so that his money would go to good use after he was gone) contributed additional funds to help develop the park and nature center. The John D. MacArthur Beach State Park opened to the public in 1989.

Another great story of philanthropy in insurance.

P/C Insurers and Charitable Giving: A Recap

While many parents are putting the final wrappings on gifts from Santa, we thought we’d take a moment to acknowledge the charitable giving of insurers.

As Insurance Journal reminds us here, U.S. property/casualty insurers have increased their charitable giving by an average of 15 percent since 2011, to an industry total of $575 million.

According to a 2015 McKinsey report, an increasing number of insurers are aligning their programs with their business strategy.

While the P/C industry continues to direct almost two-thirds of its giving to three areas – education, health and social services, and community needs – the emphasis has shifted since an earlier study in 2011.

Education funding declined by about half while contributions to health and social services increased by half and contributions to community needs rose by about 70 percent.

The survey also found that while insurers ranked the same three factors for determining the focus of charitable giving at the top of their list in 2014 as in 2011– serving local communities, aligning with business needs and meeting the interests of stakeholders such as employees and customers, the emphasis has shifted.

Some 28 percent of carriers now put local community needs at the top, up from 22 percent in 2011.

And increasing alignment with business needs has seen the biggest shift, with 22 percent now considering this factor most important, up from 14 percent in 2011.

The survey revealed that firms that look for such synergies are more likely to select charitable causes that could lead to opportunities for innovation or building new market knowledge.

The Insurance Journal article cites Bill Ross, CEO of the Insurance Industry Charitable Foundation (IICF):

The more closely you can align charitable giving to your business the greater value generation you will see. That alignment means a lot of things to P/C carriers.

The obvious one is disaster relief but if you look at insurance, the industry is involved with every aspect of life.”

We couldn’t have said it any better.

For information on the insurance industry’s contribution to community development see Impact, the Insurance Information Institute’s online resource.

 

Companies Behaving Badly

Whether it’s the VW emissions scandal or rebuilding a company’s reputation after a cyber attack, we’re reading a lot about the challenges of managing reputation risk in the business world.

How important–and valuable–a positive reputation and ethical C-suite leadership is for an organization to attract talent is highlighted by recent findings of a survey of 1,012 U.S. adults by Corporate Responsibility Magazine and Cielo Healthcare.

(Hat tip to the WSJ’s Risk & Compliance Journal for flagging this survey.)

The research identified bad behaviors most harmful to a company’s culture and reputation as:

  • Public exposure of criminal acts (33 percent);
  • Failure to recall defective products (30 percent);
  • Public disclosure of workplace discrimination (21 percent);
  • Public disclosure of environmental scandal (15 percent).

What’s the true cost of a bad corporate reputation? According to the survey, companies perceived as unethical face a potential talent shortage and increased recruiting costs as they struggle to successfully recruit women and millennials.

Only 67 percent of employed Americans surveyed would take a job with a company that had a bad reputation if they were offered more money, compared to 70 percent in 2014.

In contrast, 92 percent would consider leaving their current jobs if offered another role with a company with an excellent corporate reputation.

It would also take a substantial pay increase for many to take a job with a company with a bad reputation, with 46 percent of survey respondents needing a pay increase of 50 percent or more to consider moving to an unethical company.

Women are more motivated to work for an ethical company, the survey found. Some 86 percent of women who responded said they would not join a company with a bad reputation compared to only 67 percent of men.

In contrast, 92 percent of men and women would consider leaving their current jobs if offered another role with a company with a stellar corporate reputation.

Check out the I.I.I. online resource for business insurance here.

Insurance Industry Gives Back

I.I.I.’s new California representative Janet Ruiz brings us this timely report  from the  insurance industry’s first  philanthropic roundtable of the new year:

The first of three 2015 insurance industry philanthropic roundtables was held earlier this week in Woodland Hills, CA at Farmers Insurance to discuss the landscape of philanthropy with the theme of disaster resilience.

Speakers at the meeting presented case studies of successes such as the partnership of Farmers Insurance with the Saint Bernard Project to rebuild Joplin, Missouri. The Insurance Information Institute (I.I.I.) discussed the role of catastrophe communications in getting important information out to media and consumers before, during, and after a catastrophe. Team Rubicon talked about their mission to bridge the gap for veterans and how they engage veterans, first responders and volunteers in rebuilding communities after a disaster.

The Insurance Industry Charitable Foundation (IICF) leads the philanthropic roundtables attended by member insurance companies involved in philanthropy and community giving. It was born out of the passion of insurance professionals to make a positive community impact.

The IICF Early Literacy Initiative and Sesame Workshop Partnership recently launched — ‘Every Day is a Reading and Writing Day’ — working to provide every American child the opportunity to read and write. As Melissa Duncan, IICF Western Division says: “Early education makes true social progress.”

Bill Ross, CEO, IICF wrapped up the roundtable by reminding all of the impact the insurance industry has giving $1 billion annually in direct giving and sponsorships to charity.

It was a powerful session!

You can read more  on the insurance industry’s contribution to community and charitable causes here.

2013 IICF Week of Giving

The Insurance Industry Charitable Foundation’s (IICF) Week of Giving, an eight-day industry-wide volunteer event kicks off Saturday across the U.S.

During the week (October 12 – 19, 2013), teams of insurance industry volunteers will provide three or more hours of volunteer service at neighborhood and community nonprofit organizations.

Since 2001, the insurance industry has generated over 166,000 hours of volunteer service, serving over 150 nonprofits nationwide, and engaging thousands of volunteers in 36 states.

The IICF provides online signup for volunteer teams and coordinates contact with the charities for which volunteers work.

For a glimpse into last year’s IICF Week of Giving check out this video:

Report: More Companies Disclosing Water-Related Risks

Companies need to undertake ongoing and more robust analysis of potential water-related risks and provide more quantitative data on overall water use and financially material risks as part of their disclosures in Securities and Exchange Commission (SEC) filings, according to a new report from Ceres.

Ceres maintains that while overall corporate disclosures of water-related risks have increased since the SEC issued its climate change guidance in 2010, most reporting remains weak and inconsistent.

In its analysis of changes in water risk disclosures by more than 80 companies between 2009 and 2011, Ceres says that reporting is lacking especially in regard to data on financial impacts, quantitative water metrics and potential supply chain risks.

Ceres notes that drought and flood cycles have led to billions of dollars in losses for corporations worldwide. Drought in China in the spring of 2012 left 3.5 million people with limited or no access to drinking water and cost the affected provinces an estimated $2.3 billion. Flooding in Thailand in November 2011 cost the semiconductor industry an estimated $15-20 billion.

Here in the U.S. in early June rain inundated the Florida panhandle and coastal Alabama, resulting in more than two feet of precipitation and at least $20 million in flood damage. The region had previously been classified as in severe or extreme drought. This has led Florida officials to call for increased disclosure of risks.

A key takeaway from the report is that significantly more companies are disclosing exposure to water risk, with a focus on physical risk. Some 87 percent of companies now report physical exposure to water risk versus 76 percent in 2009, with the biggest increases coming from the oil and gas sector, according to Ceres.

The report also finds that more companies are making the connection to climate change. In 2009, only eight of the 82 companies assessed (10 percent) disclosed that climate change posed growing physical risks in the form of water scarcity, flooding or quality issues to their operations and supply chains. In 2011, that number jumped to 22 (27 percent).

Hat tip to Business Insurance for flagging this story.

The I.I.I. has information on climate change and insurance issues.

Microinsurance: Rapid Expansion

Some 500 million people worldwide are now covered by microinsurance, a low-cost form of insurance for individuals generally not covered by traditional insurance or government programs.

In fact there has been a more than 500 percent increase in the number of people covered by microinsurance in just the past five years, according to the Microinsurance Innovation Facility of the International Labor Organization (ILO) and the Munich Re Foundation.

The second volume of Microinsurance Compendium, Protecting the poor just published by the two organizations says the number of people covered by microinsurance rose from 78 million in 2007 to 135 million in 2009, reaching nearly 500 million today.

Their findings show that Asia – with its two microinsurance powerhouses China and India – is spearheading the trend, covering roughly 80 percent of the market. Latin America accounts for 15 percent of the market and Africa 5 percent.

Large and dense populations, interest from public and private insurers, property distribution channels and active government support, are some of the reasons why Asia is ahead of the game, the report says.

While microinsurance policies are typically thought of as products for emerging markets, a recent blog post over at Insurance & Technology suggests that microinsurance projects are applicable to mature economies too.

In the post, Marik Brockman, of PWC Insurance Advisory Services, says:

Even though developed economies do not have the same customer segments, per se, as emerging ones, they too have significant numbers of working poor. The constraints of remote geographies, the working poor’s difficulty in affording insurance, and differing technology infrastructures in emerging markets have led to innovations to and efficiencies in microinsurance schemes that are applicable to low growth and under-penetrated mature life, health and property & casualty markets.†

Brockman concludes that developed markets experiencing stagnating economies, increasing income disparity, and the risk of more consumers dropping below the poverty line are likely to see insurers adapt microinsurance schemes to increase insurance adoption and drive growth.

An interesting idea.

Check out further Insurance Information Institute (I.I.I.) information on microinsurance.

IICF Volunteer Week 2011

Disaster preparedness, education, the environment, housing, senior issues, women’s issues, and youth and children are some of the local community projects that teams of insurance industry volunteers will be donating their time to next week.

Volunteer Week, the Insurance Industry Charitable Foundation’s (IICF) eight-day event, kicks off this Saturday on both the East and West coasts.

During the week, teams of insurance volunteers will donate three or more hours of service at neighborhood and community nonprofit organizations. The IICF provides online signup for volunteer teams and coordinates contact with the charities for which volunteers work.

Betsy Myatt, executive director of IICF’s New York/Northeast division, says:

Volunteer Week feeds insurance industry employees’ strong desire to give back to their local communities, and supports companies that want to be active players in their communities.

In the first year in the New York-New Jersey-Connecticut tri-state area, we expected about 1,000 volunteers – and saw double that.†

Last year, the tri-state area saw more than 2,000 participants give more than 13,000 hours in nearly 200 different projects.

Since it started in 1997, Volunteer Week has contributed more than 140,000 hours of community service.

It’s not too late to be part of Volunteer Week 2011. To register go to: http://Volunteer.IICF.org

Accessing Coverage Through Microinsurance

A segment on rebuilding Haiti on NPR’s Marketplace show Friday and featuring I.I.I. president Bob Hartwig, discussed the reasons why the private insurance market in Haiti is very small. It also raised the important question of what insurers are doing to provide private-sector insurance coverage to poorer nations. The answer is microinsurance. A growing number of insurers are tapping into markets in developing countries through microinsurance projects which provide low cost insurance to individuals generally not covered by traditional insurance or government programs. Microinsurance products tend to be much less costly than traditional products and thus extend protection to a much wider market. Speaking on the NPR show, Michael McCord, president of the Microinsurance Centre, noted that the potential market for microinsurance comprises individuals living on just $1 to $2 a day. While coverage is often geared to protection from natural disasters, it can also provide coverage for property and life/health risks. Insurers operating in the microinsurance arena include Swiss Re, Munich Re and Zurich Financial Services. In November 2010, the sixth International Microinsurance Conference will take place in Manila, Philippines. The event is hosted by the Microinsurance Network and the Munich Re Foundation. Just last October microinsurance was the main theme for the annual conference of the International Association of Insurance Supervisors (IAIS). Check out I.I.I. facts and stats on microinsurance.

Donate to Haiti Relief

Insurance industry professionals seeking to make a donation to the Haiti relief effort are being encouraged to do so via two organizations – the International Rescue Committee (IRC) and World Cares Center – both of which are supported by the Insurance Industry Charitable Foundation (IICF). The IRC, with 75 years of expertise in emergency response, has sent a team of experts to Haiti to provide relief to the devastated country. World Cares Center, an organization that supports local community members as resilient first responders, is partnering with other groups to provide assistance to Haiti community groups and also support to those in the U.S. with family and friends in Haiti. “IICF is encouraging our member companies to give as generously as they can to the IRC, World Cares Center, or to other reputable relief organizations,† said Elizabeth Myatt, New York Executive Director of the IICF. IICF is also interested in learning about all industry support for Haiti relief. Please keep the IICF informed of any Haiti relief contribution made through your organization by email to contact@iicf.com