Ethics and Insurance Claims - 5 - the pivotal role of ethical culture

This is the fifth post in a series about the ethical issues associated with insurance claims. The focus today is on ethical culture, which can be summed up as the shared beliefs about how staff should behave towards others. Every firm, large or small, has its own particular ethical culture and it’s something everyone has experience of, although not usually referring to it in that way.

Think about some of the places you’ve worked. Did some of them have a different feel to others? Were some of them not very enjoyable experiences? What made some of them more fulfilling places to work than others? What you’re largely recalling are the cultures in each of those firms and offices, and how those cultures influenced how you felt about working there.

Ethics, dealing as it does with standards of behaviour at work, is clearly an important dimension of a firm’s culture. Any shared assumptions amongst staff about how cover is explained to claimants, or about claimants’ privacy being respected, will play their part in ‘how things get done round here’.

An ethical culture brings together all those assumptions about ‘how things get done round here’ and determines how staff engage with claimants (and other audiences such as suppliers and regulators). That engagement drives the outcomes that claimants experience and the conclusions (in terms of fairness and trust) they then draw. You can see from this that ethical culture acts as a form of overarching issue for claims departments, influencing their ability to take effective action on the ethical issues (information asymmetry, compensatory justice, conflicts of interest and privacy) mentioned in previous posts.

Think of ethical culture as acting on three levels. The first level is that of its visible structures and processes, such as corporate values, codes of ethics, statements about how the firm works and how the firm has organised itself to deliver all this. The second level is that of the beliefs and values held up by the firm as markers of its distinctiveness and success. And the third level is that of the deep seated assumptions that actually determine behaviours and tell staff how to see, think about, and respond to people and situations.

And it is those deep seated assumptions that stop the best written policies, the most detailed procedures and the most comprehensive training programmes from having the necessary impact. After the training is over and the procedures manual signed off, claims staff will largely return to working in line with those deep seated assumptions. This happens not because claims staff are unresponsive or uncaring, but because everyone in their department has been ‘socialised’ into thinking that certain behaviours matter most to their department’s success, and also to their own personal success.

Getting claims staff to drop some of those deep seated assumptions isn’t easy – they will find them too comfortable and will follow them too unawares. Yet change is possible, so long as it is carefully planned. I’ve just finished writing a major new paper on ethical culture (due out later this summer) and amongst the many practical steps and tips in it are these four essential steps for a change in culture:

give staff a clear business rationale for why the firm needs to improve its ethical culture, expressed in simple but compelling terms, framed in positive language and presented as non-negotiable;
be clear about how the firm wants staff to behave in the future and provide clear learning pathways to help them understand and absorb those new behaviours;
revamp your policies and procedures to reinforce those new behaviours;
reinforce that ‘have to change’ message with reaffirming examples set by management and those who have already made the change.

Changing those underlying assumptions about how claims are explained to claimants, how concerns are listened to, how decisions are taken (and much more), is the most important change that claims departments have to make in order to win the long term trust of claimants. Yet it will also be the most challenging change to make, and to sustain over time.

Many are facing up to that challenge. A recent PwC survey found that 62% of global insurance CEOs are currently looking at their firm’s ethical culture, in order to deliver strategic goals such as innovation, customer focus and of course, integrity. It is outcomes like these that drive long term profitable growth.