24-02-2021

Managing reputational risk

Insurance Alertss
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24-02-2021
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Managing reputational risk

Trust is the biggest determining factor for public engagement with the insurance profession, a value we have sadly seen coming under increasing pressure during the pandemic. As such, building our reputation is a key priority for all of us going forward, whether we are insurers or brokers, or any other part of the profession dedicated to managing and mitigating risk, commercial or personal.

Much has been written about the damage inflicted on the entire financial services sector following the banking crisis in 2008. From inside the market, we can sometimes forget that consumers were also hit very hard by the crash. Many who thought that they were making sound investment decisions in property, or savings, for example, found that their money wasn’t as secure as they had thought; the deeply disturbing scenes during the run on Northern Rock was a timely reminder. Many people felt let down by institutions which promised to protect them, and this disappointment has had lasting implications for how the public engage with financial services, even now, more than 10 years later.

It is important when looking to the future to fully understand the consequences this can have on society. For example, a reluctance to engage with cover can, in a knock-on effect, have a long-term impact on the economic growth of a nation. A steadfast insurance market is the key to reducing aversion to risk, thereby promoting innovation and growth. But for this to be possible, the public must first be ready and able to put their trust in insurance.

The Society of Insurance Broking recently published a document which highlighted how a lack of qualifications necessary to access the insurance profession may be one cause for lower consumer confidence. While it is true that there are no mandatory qualifications in the profession, insurance businesses place much emphasis on on-the-job learning, and the vast majority of professionals recognise the value of continued professional development, be that through seeking mentorship, or following a distinct curriculum. The emphasis here is placed on the willingness for professionals to continue with relevant learning, to the benefit of good outcomes for their customers. The ability to demonstrate this is one of the reasons why professionals sign up with organisations such as the CII and pursue professional titles, including Chartered. Chartered status is one of many avenues by which an insurance professional can show how they are going above and beyond the standard requirements, and this will benefit trust in the profession.

For insurance to be most effective, it must bring together multiple different elements to work towards a singular goal. Any impression that this process is disjointed may constitute a reputational risk for the profession. The public needs reassurance that the insurance profession is still about protecting the public, and this can be accomplished through transparency and a harmonious process. Therefore, we must emphasise the importance of a united profession, one which agrees on its methodologies, objectives and the values we share with our customers, for we are all customers ourselves as well.

The CII launched the Chartered Insurance Underwriting Agent title in 2020 in recognition of the growing market for managing general agents, but, recently, Lloyd’s and the CII have agreed a consensus of criteria for Lloyd’s coverholders. These include providing evidence of professional development programmes within the company and having at least 90% of customer facing roles occupied by CII members who have committed to the CII’s code of professional ethics.

We have noticed during the pandemic a complicated blend of societal and personal risk management both individually and collectively. I believe that we do not need to make this situation any more difficult - something we can achieve by being clear, open and honest with our customers to whom we pledge to provide professional and ethical advice, for the long-term benefit of us all.

Source: Insurance Business Uk