The insurance industry’s positive impact on communities represents the best of the “shared value” concept, according to IAG CEO Mike Wilkins.

The term, coined by US management guru Michael Porter, perfectly encapsulates insurers’ role, he told the Randstad Leaders Lecture Series in Sydney last week.

“Businesses that embrace the shared value concept know that by addressing the broader needs of society, they create economic value for both communities and themselves,” he said.

“The business community has a crucial leadership role in creating shared value through using its voice, as well as its scale and influence, to address matters of national importance.”

He cites the example of natural disasters in Australia, which cost the nation $6.3 billion a year on average.

“Recently IAG has been very public in its comments on natural disasters and disaster resilience. These started as a business imperative – the impact of natural disasters and the related issue of insurance affordability.”

But Mr Wilkins says he went further and concluded natural disaster spending needs to be “turned upside down”.

“The Australian Government invests about $50 million each year in mitigation measures but spends on average more than $560 million on post-loss recovery… that’s the wrong way round.”

Other business leaders agree with Mr Wilkins, who became a founding member of the Australian Business Roundtable for Disaster Resilience & Safer Communities. The group aims to influence public policy and shift the emphasis from relief and recovery to preventive measures.

Other members include CEOs from the Australian Red Cross, Investa Property Group, Munich Re, Optus and Westpac.

Partly in response to research commissioned by the roundtable, in April the Federal Government established a Productivity Commission inquiry into natural disaster funding. Its interim report is expected this month.

“We see this inquiry as a once-in-a-generation opportunity to… reduce the cost of natural disasters and save lives and property,” Mr Wilkins said.

For businesses, shared value is about the “recognition that we are part of a society, not just an economy”.