NU Online News Service, Oct. 19, 2:35 p.m. EDT
The property and casualty insurance industry contributed over $500 million to charity in 2010, but executives are dissatisfied with the return, according to a report released today by McKinsey & Company.
The report is the first overview of the industry’s philanthropic efforts, McKinsey says. Through interviews, surveys and focus groups, the report says the industry is not satisfied with its “return on giving” and notes the significant opportunities for P&C companies to enhance the impact of their charitable giving.
Education, health and social services, and community and economic development were the causes that received the bulk of the industry’s support.
The 24-page report, “Charitable Giving in the Property-Casualty Industry,” (to be posted on the firm’s website later this week) provides a comprehensive picture of P&C industry charitable giving. Among the highlights:
- Of the $500 million donated to charity by the industry, 80 percent was in the form of direct cash contributions. The remainder was employee donations of cash or volunteer hours.
- The industry’s giving is in line with other industries.
- Geography is a key factor in allocating charitable dollars, with 95 percent of companies considering employees’ residency, the location of company headquarters or customer markets or both.
- When evaluating the benefits of charitable giving, most P&C companies cited broad business goals, including enhanced reputation (80 percent), improved employee retention (55 percent) and improved customer relations (55 percent).
- Only 12 percent of P&C companies surveyed consider the ability to leverage corporate capabilities a key determinant in shaping giving strategy.
The report notes that while most P&C companies believe disaster relief and preparedness rank among the most important issues for the industry to address, these causes receive less than 5 percent of total industry contributions.
The report says disaster prevention and preparedness is one example of an issue where the industry could be “particularly effective in leveraging its unique strengths if multiple parties across the industry collaborate.”
Despite the P&C companies’ strong commitment to philanthropy, McKinsey’s research found that 60 percent of executives believe the industry can increase the social and business impact of its charitable giving and 90 percent feel there is an opportunity to raise public awareness of the industry’s charitable giving.
The report says the P&C industry can enhance the impact of its charitable giving by:
- Improving the link between business and social goals.
- Committing to causes that leverage unique insurance-related skills.
- Managing charitable giving like any major business investment. That includes deep senior management involvement, consistent focus and commitment, rigorous performance measurement and targeted communication of results.
Lastly, the report suggests that “[P&C] companies will have the greatest impact if they increase collaboration,” noting that “the industry could play a major role in addressing pressing problems where there is a need for insurance knowledge.”
Of the report, William E. Ross, chief executive officer of the Insurance Industry Foundation, which advised McKinsey on the research, says the hope is that the report “will encourage further thought, discussion and actions on the important topic of corporate philanthropy in the insurance industry.”