Leadership Support Is Key to Improving Insurance Industry Ethics, New Survey Finds

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Insurance professionals believe that having organization leadership demonstrate support for ethics is the most effective way to improve ethical behavior in their industry, according to a new survey by The Institutes and CPCU Society.

Insurance professionals believe that having organization leadership demonstrate support for ethics is the most effective way to improve ethical behavior in their industry, according to a new survey by The Institutes and CPCU Society.

The organizations polled members of The Institutes Community, an online social platform for risk and insurance professionals, to mark the 25th anniversary of Ethics Awareness Month. The Institutes and other industry stakeholders held the first Ethics Awareness Month in 1991 to begin an annual tradition of reaffirming and improving their commitment to ethics.

When the 3,000 survey respondents were asked which factor would be most important in ensuring ethical behavior, 40 percent of respondents answered that demonstrating leadership support would have the greatest impact, while 38 percent said integrating ethics into company goals would be best. Only 8 percent said punishment for unethical behavior would have the greatest impact.

“Our members are sending a clear message that risk management and insurance executives need to lead by example on ethics,” said Peter L. Miller, CPCU, president and chief executive officer of The Institutes. “Leaders should not only tell associates that ethics is a priority, but they also need to exhibit that ideal every day.”

At the same time, while more than 90 percent of respondents said that they believe insurance professionals are already largely ethical, 55 percent said they believe the public views their industry as largely unethical. More than 80 percent of respondents said the key to improving public perceptions of ethics within the insurance industry is enhancing the public’s understanding of how insurance works.

“This is striking evidence that many professionals believe their profession has an undeservedly negative reputation. All of us in the industry have a role in changing that perception, and we need to work together to accomplish that,” said Jane Wahl, CPCU, CLU,FLMI, president and chair of the CPCU Society Leadership Council. “The Institutes, the CPCU Society and our partners will continue to encourage ethical training and awareness both inside and outside our industry.”

The survey was distributed online in the second week of March to the more than 130,000 members of The Institutes’ Community, almost all of whom are risk management and insurance professionals.

Additional results of the survey included:

  •     84 percent said they strongly agree that ethics play a major role in their day-to-day jobs.
  •     41 percent, a plurality, said pressure to meet business objectives is the factor that makes it most difficult to uphold their ethical standards.
  •     62 percent said the primary reason the industry needs to act ethically is that it is the right thing to do; 14 percent said the primary reason is that customers will not trust professionals without it.
  •     48 percent of respondents said the industry is acting more ethically than it did a decade ago, 11 percent said it is not, and 41 percent said there is no difference.
  •     More than 50 percent said they think the industry will become more ethical in the next decade, 36 percent said it will stay the same, and 12 percent said it would become less ethical.

Of those respondents who said the industry is acting more ethically than 10 years ago, improving education, transparency through technology, and increased regulatory and media scrutiny were common reasons cited by respondents.

“With use of today's technology, the underwriting side of insurance is definitely more transparent,” said Terri McKane, an agent and a quality control coordinator at American Strategic Insurance. “With the impact of social media on everyday life, being ethical is the only way to go.”

Other respondents were more ambivalent about the role technology has played in ethics.

“Electronics enhance the ability to work faster and smarter; however, the personal touch is lost,” said Susan Golla, a vice president at brokerage McGriff, Seibels & Williams. “So although many processes are more transparent, the opportunity to remember that we are a people-oriented business can be lost in transaction tracking.”

While many respondents were concerned that numerous ethical challenges will keep the industry from improving its ethical practices, others saw positive trends on the horizon. Many said it is inevitable that the industry will become more ethical, because those companies that don’t value ethical behavior will find customers going elsewhere.

"As the industry evolves, with new competitors entering its markets and regulators scrutinizing it, it will become necessary to adopt as many different advantages as possible,” said Oswaldo Castillo Jr., ClaimSearch operations manager for Verisk Analytics. “A solid ethical reputation will give the industry more authority in terms of speaking to consumer needs in the market."

“Customers will continue to demand transparency and will push the envelope on ethics with insurance carriers as long as there is a need,” said Quinn Green, a loss control specialist for Nationwide Insurance. “Most customers want to be treated fairly, regardless of what type or how much insurance they purchase, so the Golden Rule will always prevail as an ideal best practice as it relates to ethics.”

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About The Institutes
The Institutes are the leader in delivering proven knowledge solutions that drive powerful business results for the risk management and property-casualty insurance industry. The Institutes’ knowledge solutions include the CPCU® designation program; associate designation programs in areas such as claims, risk management, underwriting and reinsurance; introductory and foundation programs; online courses; research; custom solutions; assessment tools; and continuing education (CE) courses for licensed insurance professionals and adjusters through their CEU business unit.

The Institutes are affiliated with the CPCU Society, a community of credentialed insurance professionals who promote excellence through their technical expertise and ethical behavior, and The Griffith Insurance Education Foundation, a not-for-profit educational organization that promotes the study and teaching of risk management and insurance.

CPCU is a registered trademark of The Institutes. All rights reserved.

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Meghan Richter
The Institutes
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