During the last decade, many insurance companies have been forced to focus on the challenges and opportunities right in front of them. From innovation and new technology to new market entrants and the threats they present, insurers have largely been playing defense. Market circumstances compelled them to update age-old ways of doing business and modernize outmoded technology systems.

At the same time, tectonic demographic shifts--such as the longevity of baby boomers and the rise of millennials--and macroeconomic megatrends raise profound questions about the very nature of the insurance business. Some industry analysts and observers even sense existential threats on the horizon.

Given this “new normal” of constant change, insurers must take a step back and rethink their purpose — not just who they are, but also who they want to be relative to what the future holds and what fundamentally different roles they might take on in the years ahead. For many insurers, this challenge will seem daunting. Seizing the opportunity will require new ways of thinking, radically different operating models and entirely new capabilities--especially in the realm of customer experience.

What is purpose? Purpose has become something of a buzzword in the business press and in management circles. As with many buzzwords, the concept seems to mean different things to different people and companies. This makes sense, given that a purpose can be as diverse and numerous as companies are.

A purpose defines the “why” of a business and is best expressed in the context of fundamental human needs. In that sense, it differs from vision and mission statements, which are more about the “what” and “how” of a business. Consider a few popular examples of corporate purpose:

• In developing driverless cars, the purpose of Alphabet, Google’s parent company, is to allow everyone to “get around safely, regardless of their ability to drive.”

• Consumer packaged goods giant Unilever has “a simple but clear purpose – to make sustainable living commonplace.”

• Australian insurer IAG’s purpose is to “make your world a safer place.”

Insurers can — and should — consider adopting similarly far-ranging and high-impact visions for the work they do and the services they provide. However, they must recognize that this is not a “me-too” or self-serving exercise, whereby they seek to show how much they care about customers. It shouldn’t be viewed as brand positioning or a public relations campaign. Although these actions may relate to purpose-driven transformation efforts, purpose doesn’t simply equate to a policy for corporate social responsibility or a rewrite of the mission statement.

Rather, defining a purpose can help insurers protect and grow their businesses by clarifying how they can fulfill unmet needs for individuals, communities and society as a whole. To a large extent, the industry’s current reactive posture and the rise of new competitors are evidence that insurers have not been delivering what consumers need, whether for their risk management, preservation legacy or quality of life. Hence, they need to rethink purpose.

For insurers, a purpose can help them connect to what matters to consumers and businesses — coping with risks, protecting what they care about, and meeting life, business and financial goals. It’s about having an organizational ambition to meet specific needs or be the industry’s best performer in one area of the business (customer service, for instance, or low-cost products). Delivering better experiences — such as making it easier for consumers to recover from a car accident or illness or to save for retirement — is also a key element in the purpose-driven equation.

To advance the science of purpose, the EY Beacon Institute teamed with Harvard Business Review Analytic Services on a survey of global business executives about the extent to which their organizations use purpose and its impact on their ability to grow, innovate and transform. The research found strong consensus among these executives that purpose matters and that it benefits key performance drivers. 

Melanie Henderson and Jeff Scheerhorn are executive directors, and Carolin Axelsson is a senior manager, for EY.

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access