Sustainable development is one of the main goals of businesses, communities, and local and national governments. Although many other sectors support this goal, one of the most underrated yet helpful is the insurance industry.
Insurance companies play a vital role in providing financial assistance in real estate, casualties, and health. Additionally, they have the largest source of long-term investments since a lot of major companies and other businesses also rely on the power of insurance.
In this article, we’ll explore the role of the insurance industry in sustainable development.
What is Sustainable Development?
Sustainable development is the practise in which the present can develop and achieve their needs without compromising the natural resources allocated for future generations. Locally, sustainable living is reusing available resources, reducing waste, and recycling without harming the environment.
Meanwhile, in a bigger picture, sustainable development encompasses three main parts:
- Economic Growth. Nowadays, various activities are promoting a sustainable economy. Some of these include equitable distribution (where individuals can receive the same amount of share of the national income of a certain country), more job opportunities, and innovation.
- Social Inclusion. People are given various opportunities to live a better life. In connection with this, health insurance is becoming more affordable, that it’s even a requirement for employers to provide health insurance to their workers. This allows more people to access healthcare without paying for bigger premiums.
- Environmental Protection. Of course, the main goal of sustainable living is to protect the environment. Concerning the insurance industry, as you know, there are such things as property insurance and car insurance that cover financial assistance from damages caused by natural phenomena. Unfortunately, climate-related incidents are one of the biggest risks that insurance companies are currently facing, urging them to enhance their support for sustainable development.
The Contribution of the Insurance Industry
In terms of the types of support the insurance industry provides to sustainable development, here are the most common ways:
1. Risk Management
One of the most significant services insurance companies provide is risk assessment. Without it, clients won’t be able to find the most suitable coverage for themselves, family members, businesses, and properties. For instance, if you’re consulting with a local insurance broker for business insurance, they know and can recommend comprehensive insurance coverage where you can claim financial assistance for flood-related incidents, given that you’re in a flood zone.
Additionally, effective risk assessment doesn’t just assist individuals but also allows communities to recover from natural disasters, and enhance resiliency. So, if there are possible ways to avoid too much damage from environmental-related disasters, a professional insurance broker can give you the right advice.
2. Financial Security
Another way the insurance industry can help in sustainable development is by providing financial security and social inclusion. As mentioned, having insurance brings financial assistance in case of various emergencies. But since the probability of risks increases everywhere, the more comprehensive insurance coverages should be. Before, an individual could avail of the basic health insurance, but nowadays, a comprehensive one is recommended.
Fortunately, with the development of the insurance industry, they’ve also created various ways to help individuals, families, and companies avail of the insurance they need. Some of these include microinsurance and employer-employee insurance. The former allows low-income families to avail of their preferred and needed type of insurance, while the latter is when the employer pays for the first half of the health insurance, while the employee pays the other half.
3. Encouraging Sustainable Practises
Have you seen various sustainable projects initiated and supported by insurance companies? Although it seems like a marketing strategy, sometimes it’s not. Since the insurance industry may suffer if the environment becomes severely damaged, many insurance companies are now participating in sustainable projects.
In addition, these companies may also offer incentives for insurance policyholders who are also practising sustainability. Of course, the incentive depends on the impact of your practise. For instance, if you’re a company practising the use of energy-efficient appliances and machines, you should let your insurance broker know as they may be aware of the current incentives the insurance company offers for promoting and supporting sustainability.
4. Promoting Innovation and Resilience
Lastly, the insurance industry also supports new practises and technologies that promote sustainability. Besides, new technologies don’t just lessen the carbon footprint but also allow risk assessment, AI, and data analytics to improve. When this continues to happen, it’ll be easier to respond to environmental threats that can affect various individuals, communities, and livelihoods.
Challenges and Opportunities
Although the insurance industry aims to promote sustainable development, they’re also facing various challenges in implementing and regulating these practises. Some of these challenges they’re currently facing are the threats of climate change, and educating people.
Various parts of the world are experiencing the risks of climate change. This is why people should be aware of these changes, and the things they can do to decrease the impact of climate change on their personal lives and businesses.
Final Thoughts
We hope this article helps you understand the connection between the insurance industry and sustainable development. If insurance companies continue to practise the contributions mentioned on the list, it can create a significant impact on sustainable development. If you want to add more to this discussion, don’t hesitate to leave a comment below.