The role that marketing now plays in insurance firms is changing. It is no longer just about how products are communicated. Marketers are now involved in some of the most important aspects of the customer proposition, such as how policies are designed, priced and serviced. So what are the key ethical issues that insurance marketers need to understand and manage?
The UK’s Chartered Insurance Institute has published a guidance paper called ‘Ethical culture: the challenge for insurance marketers’. It is organised into six sections: product, information, pricing, distribution, partners and practice. Each of these sections then looks at three to four ethics related issues under its heading. I should hold my hand up at this point and confirm that I was the lead author on the paper.
Why should an insurance marketer pay attention to ethics? Well, the reason is down to the meeting of three trends. Firstly, the digital era is transforming many aspects of insurance. Secondly, there is a greater regulatory emphasis on fair outcomes for consumers. And thirdly, as mentioned earlier, marketers now have a much greater role in how policies are built, priced and serviced. Set all this against the UK’s principles-based approach to insurance regulation and the result is increased pressure on marketers to demonstrate the professionalism of their decisions, on ethical issues such as fairness, targeting, suitability and segmentation. In short, that wider role comes with responsibilities.
The guidance paper is best used to scope the ethical issues that should be on an insurance marketer’s radar. It puts forward recommendations on suitable next steps for each of the ethical issues covered. How each of those ethical issues is prioritised and addressed is then down to each individual insurance firm.
When talking with insurance marketers prior to writing the report, there was widespread agreement that the product governance phase was particularly important for a lot of the ethical issues that insurance marketers are facing. That’s why everyone saw it as vital for the marketer to have a formalised involvement in that process, acting as the ‘voice of the customer’. Product governance is akin to the insurance notion of ‘proximate cause’ – in other words, the place where it all starts, where trust takes shape. More on this in a later post.
I would encourage every insurance firm’s marketing department to designate someone to read the guidance paper in full and then give the wider team a presentation on the ethical issues and their recommendations. The ensuing discussion can then be used to prioritise the ethical issues for the department to concentrate on. If you need any help with this, get in touch.