Insurance and the Sustainable Development Goals

The UN 2030 Agenda for Sustainable Development (“Agenda”) and its 17 Sustainable Development Goals (SDGs) outline a shared vision for a sustainable future. It is a blueprint for how we can transform our world across the economic, social, environmental, and governance dimensions, but cascading and compounding risks and crises are obscuring this vision and impacting our collective ability to deliver urgently required change. Risk and crises are overlapping, converging, and amplifying each other, causing a polycrisis and persistent instability. Only 16 percent of the SDG targets are on track to be met globally by 2030, with the remaining 84 percent showing limited progress or a reversal of progress. One critical constraint is finance with the annual SDG financing gap standing at USD 4.2 trillion.

The Agenda is the overarching development framework, complementing the other major development strategies such as the Pact for the Future, the Paris Agreement, the Kunming-Montreal Global Biodiversity Framework, the Sendai Framework for Disaster Risk Reduction, and the Addis Ababa Action Agenda. These blueprints repeatedly call for a whole-of-society approach and multi-stakeholder partnerships to achieve their objectives and emphasise stronger risk management and greater financial resources as transformation levers, yet we are not effectively using many tools at our disposal. One of these overlooked tools is insurance.

The insurance industry is a cornerstone of the global financial system with assets under management of USD 40 trillion, annual payouts of claims and benefits of USD 5-5.5 trillion, and liabilities of USD 36 trillion to pay future claims and benefits. Its distinctive risk management and risk transfer capabilities can play a greater role in helping households, businesses, and governments better navigate risks and crises, build resilience, and enable transformations from unsustainable to sustainable practices. However, insurance receives very little explicit attention in development agendas and frameworks. This lack of recognition stands in stark contrast to the other meaningful components of the global financial system, such as banking and investing, with these industries receiving considerable focus as drivers of change.

This qualitative Position Paper investigates why the industry’s strengths receive limited attention in development agendas and frameworks; it explores how to mainstream discussions around risk, resilience, and insurance; and presents ways in which the public and private sectors can scale the use of insurance solutions in development efforts. 42 in-depth research interviews were conducted with senior administrators and executives with global roles across both sectors. The synthesised findings are presented as 11 themes with 18 actionable recommendations. These proposals do not seek to reinvent the wheel. Risk management and risk transfer solutions are already used for development purposes, but the lessons from these efforts should be deployed and mainstreamed into government policies and within multi-stakeholder partnerships, and be appropriately resourced to scale and incentivise more transformational innovations.

Any reader of the daily news will be familiar with our complex and pervasive economic, social, environmental, and governance challenges. We rarely hear about impactful solutions, pioneers, progress, achievements, and successes in everyday discourse, which often focus on problems rather than solutions. Yet, throughout the research for this Position Paper our public and private sector research participants repeatedly shared data, evidence, and case studies of how the insurance industry significantly contributes to societal goals today and its potential to drive further progress if its capabilities can be fully leveraged.Václav Havel, the author, poet, playwright, and political dissident who became the first president of the Czech Republic, concluded his expansive essay, The Power of the Powerless, with a thought that neatly summarises our views on the transformative potential for insurance and sustainable development: “For the real question is whether the ‘brighter future’ is really always so distant. What if, on the contrary, it has been here for a long time already, and only our blindness and weakness have prevented us from seeing it around us and within us, and kept us from developing it?”