Purpose and Values in Insurance
The purpose you set for your firm and the ethical values that support it are central to your firm’s ethical culture. That’s because they shape the practices that determine how decisions and behaviours are made. Their importance can be summed up as follows:
- a firm's purpose tells its key audiences 'what it does, why it does it, and who for';
- and so it shapes the balance of consumer, financial and ethical demands that the firm places upon itself;
- ethical values set expectations for the decisions and behaviours happening across the firm
- they are useful reference points for people wanting to made better decisions, and people thinking of raising a concern.
It’s easy for a firm to have a purpose and a set of ethical values, and then do little with them. A box ticked, but also an opportunity lost. Thought through and embedded into a variety of processes, purpose and values can shape the ethical culture that the firm wants and help it to achieve it. It's how trust is earned.
How Ethical are your Firm's Values?
When speaking at a number of insurance conference, I sometimes show attendees a set of values used by a leading UK insurer and ask them how many of those values are business values and how many ethical values. Their response always surprises me.
While only one of the five values is in fact an ethical one (the rest are business values), the conference attendees see two or three of them being ethical ones. And so I repeat the exercise with another firm's set of values and get much the same result.
Firms often think that their values are more ethical than they actually are. Does this matter? Well, I think it does, for the tension that can sometimes exist between values like loyalty and truth are a source of many of the concerns that employees can have about questionable decisions or behaviours.
This means that a poorly designed and expressed set of values can have a direct influence on your firm's exposure to whistleblowing cases. They can have a direct influence on employee attitudes and satisfaction.
You can read more about ethical and business values here...
Honesty and Purpose
As part of a programme of work looking at the fundamental ethical challenges facing insurers, I considered the question of 'what is an insurer there for?' Out of that work emerged this article about honesty and purpose...
What this article highlights is that an insurer's purpose should shape the type of relationship it has with customers. And the type of relationship it has with customers should shape the way in which it uses data and analytics.
The reality is however, that a number of data analytics practices in use in insurance don't fit comfortably into this narrative. Their unfairness points to a disregard for customers concerns, a purpose that is more talk than walk, and an ethical culture that puts the firm at risk from regulatory penalties. A bit harsh? I think not, given some of the practices I've been reliably informed of.
What this points to then is the need for insurers to be thorough in how they take their purpose from being a statement and turn it into 'the way in which we work round here'. This means being honest with themselves about their purpose and values.
What is Honest Insurance?
We often now hear talk of 'honest insurance', but what is it? I explore it in this article...
What honest insurance means to me is...
...based upon the characteristics of that insurance. In other words, how the cover is designed and presented, how it’s priced and distributed, how claims are assessed and paid, and so on.
What we hear sometimes in insurance now is honest insurance framed around controls to stop it being bought by dishonest customers. That's the wrong way of looking at it. Honesty needs to be framed around what you do, not around what others do.