Closing the protection gap or prioritising prevention: alternative value creation strategies based on data-driven technologies in the context of insurance companies’ climate change actions

Abstract

Climate change is challenging the insurance sector’s core purpose of protecting people, businesses, and society. Simultaneously, data-driven technologies are transforming processes along the insurance value chain and playing a role in adapting to climate change. This study adopts the theoretical lens of shared value to analyse how the insurance sector has reconfigured value creation. Towards that end, a framework is presented where new avenues for value creation across three dimensions—products and markets, value chains, and local clusters—are investigated within two alternative logics: closing the insurance protection gap and prioritising risk prevention over risk transfer. The contribution is in using the theory of shared value strategy to integrate climate actions and data-driven tools into the context and goals of the insurance business. As a conclusion, the findings emphasise the relevance of purpose-based strategies and the role of collaboration within and across the industry for enhanced value creation and climate risk management.