Sustainability, Networks And Knowledge Management: Strategic Decisions At Multinational Insurance Companies In Asia, Australia And New Zealand.

Abstract

Many multinational insurance companies in Asia, New Zealand and Australia have had to adapt to challenges posed by insurtech, pollution and Climate Change, Trade Conflicts, changing consumer behavior and financial markets in their regions. This article analyzes these issues by focusing on the operations of Insurance Australia Group (IAG) during 2013-2019 – IAG insured properties and economic activity that generated substantial pollution and Climate Change, and IAG owned substantial equity-stakes in insurance companies in India, China, Thailand, Malaysia, Indonesia and Vietnam. This article: i) explains some of the corporate governance and financial stability problems and sub-optimal decision-making at IAG (IAG seemed to have intentionally engaged in asset quality management and earnings management which were intertwined with its overall strategy) – and many of IAG’s Corporate Governance, regulatory and operational problems also existed at other large insurance companies in Asia, Australia and New Zealand.; ii) discusses how insurtech has evolved and some of its effects and limitations; iii) explains IAG’s sustainability problems (environmental, economic and social sustainability); iv) explains some research-practice gaps in asset pricing and analysis of Structural Change and Financial Stability. Interestingly, despite all of IAG’s problems, Berkshire Hathaway invested in $500 million in a partnership with IAG in June 2015 (for which it got a 3.7 percent stake in IAG) with the objective of reducing IAG's capital requirements.

Keywords: Environmental/Climate Finance & Sustainability; IMF; WTO; Emerging Markets; Financial Stability; Systemic Risk; Operations Strategy; Structural Changes; Reorganization; Networks.