P&C insurer Chubb combats racism within US justice system
Established in 2008, the Chubb Rule of Law Fund is a staunch supporter of organisations and activities that fight against corruption and discrimination, and an advocate of social security, transparency, and justice. 15 law firms contribute to and support the Fund.
Over US$1.6m in grant money has previously been awarded to 62 projects, with four new grants (total $1.1m) now given to causes pursuing equity and racial justice in the US’ system. These are:
- Equal Justice USA ($250k)
- The Policing Project ($350k)
- The Vera Institute of Justice ($250k)
- The Southern Center for Human Rights ($250k)
“The Chubb Rule of Law Fund seeks to build and enhance legal systems marked by impartiality, fairness, equal access and enforceability. The Fund is a unique corporate initiative and we are proud of the important rule of law projects that we have supported across the globe,” stated Joseph Wayland, Executive VP, Chubb Group General Counsel.
Insurance for good
Chubb’s advocacy for the aforementioned causes demonstrates the impact that 2020’s social unrest continues to have. Recognising that, as an insurer, there are ways for the company to leverage its influence to help address these issues, Wayland added:
“As Chubb strives to create a culture of anti-racism, we recognise that we, as a company and as individuals, cannot be bystanders. Our support for philanthropy and citizenship, including this new round of Chubb Rule of Law Fund projects, is one way we are advancing this goal.”
This bears a resemblance to other strong ESG moves by leading insurers, such as Lloyd’s. In December 2020, the London insurer proclaimed that it would be abandoning the provision of coverage to fossil fuel companies by 2030. Furthermore, insurance on coal, oil sands, and Arctic energy is to end even sooner in 2022.
Pressure is being placed on insurers by consumers to match their values, and those who do not realise the economic potential of this alignment are likely to languish. This is particularly important as millennials - of which 83% want brands to be socially responsible - become the dominant global market demographic.
FCA bans ‘price walking’ for insurers from Jan 2022
Insurers will no longer be allowed to raise premiums upon annual customer renewals following a new ruling by the Financial Conduct Authority (FCA)
The new move, which comes into effect in January 2022, will directly affect people renewing their home or motor insurance because they will pay no more for their premiums than a new customer.
The FCA said the change will save loyal customers an estimated £4.2bn over a 10-year-period. However, it also admitted the move could mean cheaper deals for new customers can no longer be sustainable for insurers attempting to attract business.
Price walking practices ended
According to reports, the FCA has been working on changing the rules on ‘price walking’ as it is termed, because customers are charged more their annual premiums, even though their level of risk remains the same. The system has resulted in complaints from consumer groups that loyal customers pay more unnecessarily.
"These measures will put an end to the very high prices paid by many loyal customers. Consumers can still benefit from shopping around or negotiating with their current provider, but won't be charged more at renewal just for being an existing customer."
Victory for the customer
Consumer groups have hailed the change as a victory for customers who have ended up paying higher premiums unnecessarily, but admitted it presented huge implications for insurers in the short term.
Consumer Intelligence CEO, Ian Hughes said, “These changes represent a tsunami for both insurers and their customers, but we should be in no doubt that the fault line that sits underneath this is fair value, mentioned 153 times in the final statement. GIPP changes will feel like just a ripple for those who don’t offer fair value to customers."
He continued, “This is going to be a bumpy ride for insurance brands and consumers alike in the short term. Today, the FCA has revealed that cash and cash-equivalent incentives, other than toys and carbon off setting, cannot be used to entice new customers without being offered to renewing customers. This means the savviest consumers who shop around each year will see prices rise and discounts and offers disappear.
“However, there is an opportunity for the industry to take advantage of all this change that is coming and do something that will be good for brands, good for the industry and good for consumers."
Consumer Intelligence PR and communications manager, Catherine Carey agreed, and described the victory as “a shot in the arm for innovation.”
Carey said the move “presses a giant reset button on the relationship between price and value, it will change the relationship between brands and consumers.”
She explained, “We expect to see insurers changing their models and new firms entering the market for the first time as loss-making year one pricing phases out. If you look at these new rules, and specifically the introduction of fair value, it’s the most exciting time for the development of the general insurance market for decades.”
Hughes also warned against insurers resisting the regulatory change, “Those that don’t take advantage of the opportunity are going to find it really tough.”
He added, “The tipping point we find ourselves at today is a critical point in the journey of this industry and there is an opportunity to be positive.”