The Ethical Risks in Insurance Claims
Claims functions face some of the most complex ethical risks in insurance. That’s because the claimant knows about their loss, and the insurer knows about the policy’s cover. This mutual imbalance of information creates ethical tensions that require careful management in order to deliver a trusted claims service.
The main ethical risks in insurance claims fall into these four categories…
- Conflicts of interest
- The question of fairness
- Data ethics and privacy
- Ethical culture
None of these four risk categories are new to insurers, yet the scope and depth of the ethical issues they encompass is often under-estimated by insurers.
Conflicts of Interest in Insurance Claims
Conflicts of interest in insurance claims are the most fundamental ethical risk in insurance. This is because the insurer has to manage the conflict between their public interest in providing a fair settlement, with their private interest in operating a profitable business. And because there are always claims to be settled, and there are always performance results to be achieved, conflicts of interest are an ethical risk that just never goes away.
And because it is one of those ‘always present’ risks, the question is less about whether you can fix it and make it go away, and more about how well you are managing them. This realisation needs to be integrated into your conflicts policy. I’ve seen some that only talk about potential and perceived conflicts of interest, and not actual conflicts of interest. These insurers had a blind spot that often took a lot of work to put right.
Managing Culture to reduce Ethical Risk
Claims people make lots of decisions every day and a strong culture helps bring consistency to them. Yet that strong culture can introduce behaviours that generate ethical risk. This is the field of behavioural ethics and four behavioural risks are worth noting by claims and compliance people. I explore them in these four articles...