Today, global society demands that organisations do well by doing good – make profits while sustaining society. It’s an expectation driven by global financial crises, savvy millennials, the effect of digital technologies on freeing the flow of information and more.
Today’s healthcare insurers have a powerful social role to play. Alongside government, they can directly monetise better health, aligning commercial interests with bettering society – so creating shared-value. Discovery pioneered shared-value insurance 25 years ago. This business model has changed the face of global insurance.
Applied to health insurance, shared-value allows for early identification of the behavioural nature of risk. Our products have shifted client behaviour towards healthier, safer choices. As our clients are encouraged to behave in a sustainable way, this impacts risk reduction and creates actuarial surplus and profits. This surplus is both used to fuel further innovation for sustainability and shared with clients, rewarding their efforts and loyalty and feeding a healthier society.
The model is as powerful when applied to insurance. South African roads are some of world’s most dangerous. Accidents result in a staggering 10% cost to our GDP. Our road accident death rate – at 31/9 per 100 000 people – is higher than that of the other Brics countries.
Much of the risk on our roads is behavioural in origin. Using cutting-edge telematics technology, Discovery Insure measures and rewards good driving behaviour so incentivising drivers to reduce their risk, translating into decreased frequency and severity of claims, reduced driver fatalities and safer roads.
Another compelling process is set to impact sustainability. After extensive industry engagement, SAICA, under the guidance of project director for integrated reporting, Loshni Naidoo, has established the Health and Wellness Advisory Group (HWAG) to champion incorporating Health and Wellness Reporting into integrated reporting. SAICA will sponsor the initiative which aims to identify advocacy platforms for voluntary adoption of health and wellness reporting amongst corporates. A similar approach was followed by the Carbon Disclosure Project (CDP) with good results.
Reporting on the health and wellness in the workforce will mean the integration of health metrics into traditional corporate reporting, aligning with and expanding on existing reporting frameworks like the International Integrated Reporting Framework and Global Reporting Initiative (GRI) G4 guidelines. Health metrics add to a more comprehensive interpretation of Human Capital, one of the six capitals included in the Integrated Reporting Framework, so enhancing the ideal of sustainability.
Sustaining society means sustaining business
Society at large wants to see businesses and their leaders commit to a deeper purpose, one that removes perceptions of short-term profit for a few, won at long-term cost to the many.
Sustainability isn’t just the right thing to do from a marketing, brand-love and compliance perspective. We all benefit when we align business strategy to the longevity and sustainability of society. I have shared two powerful, scalable examples of ways in which to contribute to sustainability in our businesses, examples that prove that bettering society as a whole makes business sense on every level.
Author: Brett Tromp CA(SA) is CFO of Discovery Health
This article was originally published by the South African Institute of Chartered Accountants in January 2018. You can read the article here.