A joint blog from the ABI and ShareAction
In this blog we will unpick the role of insurers, both as protectors and investors, in influencing population health. It also sets out the steps that ShareAction has identified for insurers to take to harness their powers as investors to address health-related risks across society.
Good population health is vital
Good population health is the foundation of well performing companies, resilient economies, and a thriving society. Yet tens of millions of people's lives are limited each year by preventable ill-health. Non-communicable diseases (NCDs) account for 90% of deaths in the European Region, with four key risk factors – tobacco, alcohol, ultra-processed food and fossil fuels – causing the majority of these.
Insurers play a key role in shaping health
Insurers can influence population health in several ways, for example:
- Incentivising their customers to make healthier choices through health rewards and discount schemes;
- Facilitating quick access to healthcare services; and
- Providing protection for individuals and businesses against financial shocks should a health issue arise.
The health and income protection insurers that provide these products and services are incentivised to improve the health of the people they protect as this will reduce the cost of claims and enable them to offer more competitive premiums. Therefore, insurers invest a significant amount of resource and research into preventing ill-health. They help people to proactively manage lifestyle factors through behavioural nudges, incentives and prompt access to diagnostics and treatment. These prevent health conditions from arising and worsening, improving people’s quality of life and reducing the need for more complex and costly treatment.
The growing investment case for good health
A less well-understood and utilised, but equally important, way insurers and the long-term savings sector can influence population health is through their role as responsible investors. Initiatives like the Department for Work and Pensions (DWP’s) Taskforce on Social Factors, and ShareAction’s ‘Long-term Investors in People’s Health’ (LIPH) programme and Insuring Disaster benchmarks are helping to close the knowledge gap. These initiatives are encouraging and supporting insurers and other investors to use their investment decisions, voting rights and meaningful company engagement to improve population health.
The case for investors to consider health outcomes in their investment approaches is compelling. Good health and wellbeing enable workers, consumers and communities to thrive and contribute positively to society and enable a healthy economy. Large, diversified institutional investors will benefit from tackling systemic health threats to the economy given their portfolios are likely to be more affected by the global economy than individual company performance.
Whilst the link between people being out of work due to their health and the health of the economy has existed for a long time, it came to the forefront during the COVID-19 pandemic. A recent study shows a record 2.83 million people aged 16-64 are out of work due to long-term health conditions. This has a negative impact on businesses and the economy, due to rising levels of absenteeism and presenteeism, resulting in increased spending on sickness and disability-related state support, reducing overall economic output and increasing pressure on healthcare systems.
In July 2024, the Chancellor stated “Economic inactivity is holding Britain back – it’s bad for people, it’s bad for businesses, and it’s bad for growth”. Exclusion from the workforce negatively impacts individuals’ mental and physical health, financial security and social inclusion. The Health and Social Care Secretary has committed to supporting the government’s growth mission by improving the health and wellbeing of the nation, enabling people to return to work.
Improving the health of the nation is not an easy win. As much as 60-80% of people’s health outcomes are driven by wider commercial, social and environmental factors. Some of the conditions that support good health and wellbeing include access to high quality jobs and a secure income; access to medicine and vaccines, quality housing and nutritious food; and access to clean air and water. Governments, regulators, businesses and investors all play an important role in creating conditions that have a positive impact on our health and wellbeing.
Investors have a fiduciary duty to consider environmental and social factors in their investment decisions, voting and stewardship of investee companies. We recognise many investors are already undertaking a significant amount of additional due diligence and reporting related to climate action. Whilst regulatory frameworks do not yet require similar disclosures related to social factors, including health, the regulatory and legislative environment is making it harder for companies to ignore their impacts on health. For example, tobacco sales have been restricted worldwide, 115 countries have implemented taxes on sugar-sweetened beverages, and many European countries are revising or planning to introduce air quality standards in legislation.
Insurers can take action to improve health as responsible investors
ShareAction has identified a range of steps that insurers, as asset owners, can take to address the health-related risks and maximise financial opportunities within their investment portfolios, including:
Direct and collaborative engagement:
- Publicly signal to your key stakeholders (including customers, asset managers, investment consultants and investee companies) that using your financial assets to improve population health is a priority.
- Use meaningful stewardship of investee companies to influence company practice on health issues. For example:
- Worker health: determine investee companies’ working conditions, such as whether all employees are paid the Living Wage, offer sick pay and equitable parental leave, and have appropriate occupational health and safety measures in place. Consumer health: encourage food companies to improve the healthiness of their products and to shift their sales towards those healthier options, such as by setting targets to reduce fat, salt and sugar content, and restricting the marketing of these foods to children. Community health: hold companies to account for their contributions to water and air pollution or nature degradation.
- Through stewardship reports, communicate publicly and transparently about health-related company engagement activities and the outcomes realised.
- Outline health-related responsible investment expectations for asset managers and monitor managers against these to ensure they fulfil the requirements.
- Become a member of ShareAction’s LIPH programme (and encourage your asset managers to get involved). LIPH brings together a coalition of over 45 investors globally and supports them to consider worker health, consumer health (e.g. alcohol, tobacco and nutritional health) and community health (e.g. water and air pollution impacts) as integral parts of their stewardship and investment practices.
Investment decisions:
- Restrict investment in companies whose products have a negative impact on population health, such as tobacco companies, or those that repeatedly fail to make progress.
- Use ShareAction’s Investor Guide on Health to identify and assess the health risks and the overall health impacts of your investments. This guide outlines several initiatives, benchmarks and metrics investors can use to develop a responsible investment strategy that prioritises health and report on progress.
Policy engagement:
- Advocate for policy change by engaging with regulators and policymakers on health issues, for example by advocating for greater corporate disclosure on health matters.
- To help insurers adopt an approach that enables comparability and transparency, the ABI, amongst others, has recommended the government introduces a minimum level of workplace healthcare provision that must be provided by employers to their employees. The ABI has also recommended the government explores the potential for mandating businesses to publicly disclose what actions they are taking to look after their employees’ health and wellbeing.
Insurers are already taking action on health
Considering the rise of non-communicable diseases, AXA has decided to disengage from the tobacco manufacturing industry, as outlined in its Global Responsible Investment Policy. AXA believes that supporting the tobacco industry, either directly through investments or indirectly via insurance, is not compatible with their objectives to promote health and prevent the risk of disease.
The introduction of an ESG discretionary fee is helping to drive positive population health-related change
The Dutch health insurer VGZ prioritises health as part of its responsible investment approach. Health is one of three key pillars making up VGZ’s responsible investment policy, leading to the organisation restricting its investments in companies involved in tobacco or alcohol production. VGZ also actively engages with its investee companies on health issues to drive positive change.
Most recently, VGZ has introduced an ESG fee to two of its asset managers to further hold them to account on three key ESG areas: engagement, reporting and contributions to sector initiatives and collaboration. Since introducing this ESG fee, good progress has been seen, particularly on company engagement on health issues. Through quarterly dialogue, VGZ collaborates with its managers to deliver results beneficial for both parties.
This new process forces the asset owner (us) to really dive deep into the ESG performance of the asset manager and think through with them how they could improve. Whilst this requires considerable time from the asset owner, we see this effort as being our responsibility
Hester Holtland
Senior Portfolio Manager Sustainable Investing
The process has created strong partnerships between the asset owner and its asset managers to drive forward positive population health-related change.
The insurance sector has the capacity to be more ambitious in driving meaningful health-related change
Insurers play a key role in improving population health in many ways. The above steps and examples of industry progress highlight the opportunities for investors to become leaders on health, both in supporting their clients and protecting returns. We encourage you to start making some small step changes from today and would welcome the opportunity to guide you on this journey.
For more information or any questions, please contact Shareaction at francesca.skinner@shareaction.org or louisa.hughes@shareaction.org or the ABI.