Insurance Does Good [Risk Management]

Philanthropy, volunteer work and social outreach in the industry

When you think of an insurance company, chances are that your first thoughts include paying lots of money for protection you never need, surprising "rate adjustments" and denied claims. On the surface, it often seems that insurance companies take a lot and give nothing back.

On the contrary, the U.S. propertycasualty industry contributed more than $500 million to charity in 2010, according to the McKinsey & Company report "Charitable Giving in the Property & Casualty Insurance Industry." Though that might sound like a big number, it isn't altogether special; the property/ casualty industry's overall volume of giving is comparable to other industries. Its cash contributions as a percent of pre-tax profits, however, do exceed the norm, as it gives away 0.89% of profits compared to 0.78% across all industries. Education, health, social services, and community development top the recipient list of insurer donations.

"We're committed to breaking down barriers to success and creating opportunities through education, arts, culture and community development," said Marlene Ibsen, vice president of community relations for the Travelers Companies and CEO of the Travelers Foundation. In 2011, the Travelers Foundation provided some $21 million in community support, about $9.5 million of which went to educational organizations and activities. The company's employees also logged more than 31,000 volunteer hours and supported 35 Habitat for Humanity volunteer builds in 22 states.

Allianz Life Insurance Company of North America supports similar endeavors. In 2011, the company contributed more than $1.6 million to Twin Cities-based nonprofit organizations. Company contributions were awarded through strategic relationships, grants, scholarships and employee volunteer programs.

Specifically, Allianz Life awarded grants totaling $275,000 to nonprofits that focused their efforts on financial literacy education or training. The company gave another $275,000 to organizations that strive to improve the lives of Twin Cities' seniors. And it always makes a large charitable push around the holidays. "Last year in November and December, Allianz Life employees donated 23,970 pounds of clothing, 28,597 pounds of food and 3,810 toys to needy families in our communities," said Sara Thurin Rollin, Allianz' director of external communications.

Given how easy Allianz makes it for workers to volunteer, this is little surprise. Employees are given eight hours of paid time each year to volunteer in the community. In 2011, approximately 500 employees took advantage of the opportunity, giving more than 3,400 hours to charitable causes - the equivalent of $73,000 in volunteer help. The company also gives the cause an extra $100 per employee volunteer whenever five or more Allianz workers team up to help the same nonprofit.

FM Global has a similar philosophy. The Johnston, Rhode Island insurance carrier maintains a "Volunteer Day" policy that allows its employees to take one day of paid time per year to work at a charitable organization. This complements the company's substantial giving.

During the past 10 years, FM Global and its employees also have contributed $35 million to educational, civic and cultural institutions as well as hospitals, and the United Way. Ofthat total, $13 million has been contributed by employees and matched by funds from the its FM Global Foundation

Education has been a specific focus.. "FM Global's Fire Prevention Grant Program has earmarked millions of dollars over the years to help fire service and related organizations with their efforts," said Steve Zenofsky, assistant vice president and manager of public relations for FM Global.

The insurer has also donated $525,000 to the Spencer Education Foundation, a nonprofit organization that provides scholarships for young adults who pursue a college education in risk and insurance.

Insurance broker Aon has focused some of its philanthropic efforts on niche causes. It recently launched one of the risk and insurance industry's first global social responsibility initiatives by supporting Find a Better Way, a charity founded to develop new technology to aid the detection and removal of landmines around the world.

"Landmines are a leading cause of death and maiming to the men, women and children who live in impacted areas, which span 70 countries," said Carolyn Frost, vice president and executive director of the Aon Foundation. Along with support from other industry companies including QBE, XL Insurance, Axis Capital and Catlin, insurers have supplied $1.5 million in funding.

Aon also established the Bernard Fung Memorial Fund at the China Literacy Foundation to honor Bernard Fung, a former chairman and CEO of Aon Asia Pacific who died in 2010. Fung was particularly passionate about the China Literacy Foundation, which promotes access to education and improves learning facilities for children living in poor, remote regions of China.

"Following his passing, Bernie's family established the Bernard Fung Memorial Fund to continue this important work," said Frost. Aon's partnership included a $ 1 million commitment to the fund, which has provided scholarships for nearly 100 students, funded the construction of nine libraries and paid teacher salaries.

Children's health is a top priority for American Collectors Insurance, which specializes in insuring collectibles and collector cars from its home office in Cherry Hill, New Jersey. One of its leading causes is the Pediatric Brain Tumor Foundation, the world s largest nongovernmental source of funding for childhood brain tumor research.

Last year, the company raised nearly $30,000 for the foundations Philadelphia Ride for Kids fundraiser, an event that brings together hundreds of motorcyclists for a scenic ride through the Pennsylvania countryside. "We have been the number- one fundraising team for the Philadelphia Ride for Kids since 2007," said Jill Bookman, CEO of American Collectors Insurance.

Supporting Local Causes

A key player in the entire sectors philanthropy is the Insurance Industry Charitable Foundation (IICF), an insurance industry-funded and directed nonprofit established in 1994 to provide grants, volunteer service and leadership on the sectors philanthropic initiatives. In its history, the IICF has awarded in excess of $18 million in community grants and accumulated more than 155,000 hours of volunteer service to support causes including children at risk, disaster preparedness, education, environment and health services.

Since 1998, IICF has also hosted "Volunteer Week," the largest ongoing volunteer initiative in the insurance industry. Started in California, Volunteer Week has grown into an 18-state event that takes place every year in October. During this one-week period, more than 4,000 industry volunteers provide approximately 15,000 hours of service to nonprofits in the communities where they live and work.

According to IICF CEO Bill Ross, a key component of its efforts are to ensure that the needs of the surrounding community are met. Part of its granting philosophy is that funds raised in a region are reinvested back into that same region. In 2011, for example, IICF awarded $933,000 in community grants to outstanding nonprofit organizations.

This mission aligns with the findings of McKinsey's research, which indicated that geography is almost always a factor companies consider when allocating charitable dollars. A near- unanimous 95% of companies consider employees' residency, office locations and customer markets into their philanthropy decisions. This is encouraging, according to McKinsey, as starting local is a good way to create true buy-in, both for the employees and the community.

Hiscox, a Bermuda-based insurance carrier, can confirm that its charitable efforts are more effective when it collaborates with its employees and key stakeholders. Through Hiscox Foundation USA, the company donates to a variety of causes, especially charities in which its employees participate. "We have the best success when we can help out people in the areas where we operate and have a high level of employee participation," said Nicki Goodwin, chief claims counsel for Hiscox USA. "These are the events that people really remember and help us form lasting ties in the community."

Hiscox Foundation USAs San Francisco office, for example, supported the Make-a-Wish Foundations San Francisco Police Department Challenge, raising more than $40,000 in 2011 through a competitive San Francisco cable car pull. In New York, nearly two dozen volunteers from area Hiscox offices participated in an initiative to overhaul a neglected neighborhood playground and picnic sites in the city. The team repaired park benches, built flower planters and painted a mural at the site. "As an added bonus, the volunteers were treated to a festive barbecue and music by local residents afterward," said Goodwin.

American Collectors Insurance has a similar philosophy. The company encourages employees to report any work they do that supports the community or a charitable organization. One manager at American Collectors, for example, fosters puppies that are trained to be seeing-eye dogs. When the company leaders found out, they helped set up a SeeingEye.org fundraiser to support the cause - and even told the manager to bring in one of the puppies to visit. "She brought Rex to work every Saturday for months so that he could get acclimated to an office environment," said CEO Jill Bookman. "He was a very nice guest worker."

Staying local is also part of the giving strategy for Allianz Life. For each of the past 10 years, the company has had its employees nominate nonprofits to be in the running for four $25,000 donations and "significant" volunteer time. To be nominated as a charity, at least 10 employees must already have volunteered there. "Our employees are empowered to direct our giving," said Thurin Rollin.

Give to What You Know

Accident Fund Holdings, a workers comp provider in Lansing, Michigan, puts a different spin on "staying local." Like many other companies, it funds various initiatives and many of its board members also serve on boards for charitable organizations. In Accident Fund Holdings' annual Caring and Sharing Campaign, for example, employees can choose from 30 recipient organizations to donate money that the company then matches.

But the company believes it can best serve the public by donating to causes that relate to its work. "We try to focus on nonprofit organizations that have some connection to our core business: workplace safety, accident prevention, return- to- work programs, disabilities, rehabilitation, economic development and education," said Sarah J. Garcia, community relations specialist for Accident Fund Holdings.

American Collectors Insurance has also found a unique way to turn its expertise into philanthropy. It is a founding sponsor of The Road Home, an organization whose motto ("We aim to help restore lives, one classic car at a time") matches its mission: pairing veterans with classic car restoration shops.

Many veterans, despite their military careers and experience, are unemployed. Nearly 900,000 veterans in the United States are jobless; for those between the ages of 18 and 24 the unemployment rate is more than 30%. America Collectors' CEO says that it has targeted its efforts towards easing this pain by helping veterans make a productive transition to civilian life.

"The Road Home aims to give veterans opportunities to work in the restoration community while building their new life back home here in the United States," said Bookman. "We have thousands of customers who are active or retired military personnel, and we see a strong link between the growing car hobby and the skills of veterans. Veterans' training and experience can benefit employers in the restoration field, who need people with strong mechanical skills and the ability to complete a job as part of a team."

The program is currently matching the first round of veterans with restoration shops in Florida and Texas. After that, it will expand to a number of states, something that Bookman says the collectible car community is eagerly awaiting. "A number of people who own cars in need of restoration want to know what shops are participating so they can also support our program," said Bookman.

According to the McKinsey report, this is the optimal way to give back. Supporting any worthwhile cause is a noble act that should be applauded, but when the charity can be supplemented by creating a real partnership in which the funding organization can also offer expertise on the issue, the benefits can multiply.

American Collectors Insurance, with its niche knowledge of the restoration community, found a unique way to help. But for most of the industry, better targeted giving means supporting areas in which insurers have traditionally been experts.

To deliver maximum impact and achieve greater recognition for their charitable giving, McKinsey's report recommends that insurance companies take the following steps: improve the link between business and social goals; commit to causes that leverage unique insurance-related skills; manage charitable giving like any major business investment; and improve industry-wide collaboration.

Insurance companies will create the greatest impact if they increase collaboration, especially in those areas of urgency where there is a need for insurance knowledge. "If the property/ casualty industry can change its approach to charitable giving," states the report, "it has the potential to play a transformative role in addressing some of the most critical, highest-profile problems facing society today, especially around disaster prevention and preparedness."

Despite the sector's strong commitment to charity, McKinsey's research also found that 60% of insurance executives believe the industry should engage in more philanthropy. Giving more money and more time would certainly be a nice gesture. But by taking McKinsey's advice, insurance companies may also be able to increase even their current levels of philanthropy.

The IICF, for one, is already moving its efforts in that direction. "As innovative leaders, we must find the time and resources to broker new solutions to the challenges our communities face and to devise the most impactful strategies for solving these problems," said foundation leader Ross. To him, the best route to do the most good is "joining forces with competitors in a collaborative network rather than holding onto our own separate and individual niches."

"If the property- casualty industry can change its approach to charitable giving, it has the potential to play a transformative role in addressing some of the most critical, highest- profile problems facing society today."

-McKinsey & Company

"The Road Home aims to give veterans opportunities to work in the car restoration community while building their new life back home here in the United States. We see a strong link between the growing car hobby and the skills of veterans."

- Jill Bookman, CEO of American Collectors Insurance

Travelers employees logged more than 31,000 corporate and personal volunteer hours in 2011 and supported 35 Habitat for Humanity volunteer builds in 22 states.

Mark Crawford is a freelance writer based in Madison, Wisconsin.