Peter Hamilton: Building back a fairer future for all

Fairness - or lack of it - is a theme that dominated 2020 and will do so again in 2021. It's a topic that is covered in the Zurich co-sponsored Global Risk Report, which can be found here.

The report has been running since 2006, but it somehow feels more timely than ever. There's a lot in it, but it's a very accessible read, and draws out a range of global and societal challenges.

Towards the end of the report, it articulates future risks that sound as if they could be science fiction, but may become science fact, and are there to encourage more expansive thinking and planning.

One is ‘Brain-machine interface exploited': ‘Companies, governments or individuals utilize burgeoning "mind-reading" technology to extract data from individuals for commercial or repressive purposes'.

Another is ‘Gene editing for human enhancement': ‘Governments begin classified genetic engineering programmes. A class of people is born with genetic capabilities better suited for space, Arctic, or deep-sea survival, setting off a genetic arms race between geopolitical rivals with undetermined ethical consequences.'

It's good to know some smart people are thinking about this kind of thing. Jumping back to the beginning, the report looks at shorter term horizons - employment and livelihood crises, widespread youth disillusionment, digital inequality, economic stagnation, human-made environmental damage, erosion of societal cohesion, and terrorist attacks - none cheerful, but all are important.

Here I've reflected briefly on the report's findings, and then applied a protection lens to see what some of the issues are and what actions we might consider.

Fair share

The report notes that Covid-19 could widen the gap between the ‘haves' and ‘have-nots' causing billions of people globally to miss out on future opportunities, and the pandemic uncovered a digital divide as we were forced to work, learn, communicate and access health and financial services online.

In some cases, disparities in health outcomes, technology, or workforce opportunities are the direct result of the dynamics the pandemic created. In others, already present divisions have widened, straining weak safety nets and economic structures. Whether the gaps can be narrowed will depend on actions taken to rebuild towards an inclusive and accessible future. 

The issue of health inequalities is a challenge reported on in depth in another powerful report:

There's a lot of talk about ‘building back better' after the pandemic. It's pretty clear that the impacts of Covid have not been fairly spread. The health impacts have weighed more heavily on the old, while the young have felt the economic impact and potentially the mental health impacts much more keenly. Many have jobs in hospitality and the arts for example, areas that have been particular hard hit. 

The Institute for Fiscal Studies reported in June that the bottom 10% of earners are the most likely to have jobs in sectors that had shut down or could not be done from home. 

There's even a new label - "Pandemials", at risk of becoming a lost generation, facing new barriers to social mobility, strains on mental health, uncertain economic prospects and the continued degradation of the planet.

At the time of writing, investment markets had surged above pre-pandemic levels, delivering gains that will mostly benefit wealthy, older shareholders.

Fair exchange is no robbery

How can we ensure greater fairness between different generations? You can chart the decline of Teresa May's fortunes pretty much to the inclusion of a manifesto pledge on long term care. It was soon dubbed ‘the dementia tax', with little credit in the eyes of a sceptical public given to the notion that ‘nothing has changed'. One thing the proposed policy did do though, was to recognise the dangers of intergenerational unfairness.

Social care needs is a critical issue and needs to be paid for somehow. If the assets of an older generation are entirely protected, the cost falls through taxation on a younger generation, who've not had the benefits of free education, final salary pensions or house price inflation, themes highlighted in David Willets book - The Pinch How the Baby Boomers Took Their Children's Future - And Why They Should Give it Back. One challenge that has to be high on the government's agenda is how we achieve a ‘fair' settlement for long term care. As insurers, once we have clarity on what support is available to whom, we can create supplementary propositions.

While the baby boomers focus government attention on retirement and healthcare, the young will legitimately want a focus on lifetime education and skills development, flexible working and transitions between different types of employment.

One important step along the way is to ensure our own industry is one where different people want to work, where they feel valued and can make a difference. The more our workforce can reflect the diverse makeup and interests of our communities and customers, the better. We need to do more to make insurance a career of choice - how often do we hear people say they ‘fell into insurance by accident'?  (I did a law degree, and it was two years into my first job with Legal & General that I realised they weren't a firm of solicitors…). 

Within Zurich, we have apprenticeship schemes, graduate schemes and a ‘Next' generation group that is ensuring a voice for our young talent is heard in the boardroom. One other obvious point is that we have a generation now that is passionate about sustainability. Consumers and employees are now scrutinizing corporate values and behaviours more intensely, and insurers have a huge role to play. Companies who can authentically point to how they are building a sustainable future will have a head start attracting new talent, including those who see that economic growth has limitations as a measure of societal success.

Fair play to you

Access needs to go beyond differences between young and old. How do we help build careers for colleagues with visible and/or non-visible disabilities and health conditions? Zurich is a ‘disability confident' employer, has a range of influential Employee Resource Groups, we've published disability pay gaps (as well as gender and ethnicity gaps), but there's much more to do.

And for our customers, how do we ensure fair access to all of our products? Johnny Timpson, with his Access to Insurance Group has laid down important markers on signposting, transparency of underwriting decisions, professional standards and access to insurance through the workplace.

Looking at products, we need to question things like the length of the term we have. Our policies typically extend for 25 years or more, when a new generation of customers will have a financial horizon which may not extend too far beyond the next credit card bill. There are reasons we have long-term policies - not least certainty of cost and availability of cover, but presentationally we have a mismatch.

Plans need to cope with periods out of work - sabbaticals and retraining and education, recognise the family unit in a way that many savings platforms do, as well as promote a healthy and longer life.  

All the fun of the fair

Just four of the things we might hope for in 2021 and beyond:

1. That we get a long term care settlement that is fair to all generations.
2. That our customers believe that insurers are fair and transparent in the way we underwrite and offer access to products, but also how we assess and pay claims
3. That the make-up of our employees better reflects the diversity of customer base we serve
4. That insurers use their weight and influence to address the wider societal issues of fairness that our diverse customer base really care about, from health inequality to a sustainable future for our planet.

You may say I'm a dreamer, but I'm not the only one. Just imagine…

Peter Hamilton is head of market engagement for Zurich