Dec 11, 2014 2 min read

The three ingredients of ethical behaviour

Many firms in the insurance market will be looking to make progress on ethical behaviours in 2015. That’s great, but before doing so, it’s important for those firms to really understand what ethical behaviour means. Here are some thoughts about its three key ingredients.

The first ingredient is the ability to discern the ethical dimension to a decision you’re taking. This is often underestimated, under the guise of adages such as ‘business is just business’. Yet there are few decisions made in insurance that do not involved other people; that do not affect someone’s rights or responsibilities, and; that do not make someone better or worse off. Each of these aspects can introduce an ethical dimension to that decision.

So you should expect to find many decisions made in insurance having an ethical dimension. Now, to illustrate this, I could point you towards this blog post from early 2013, in which I outlined six ethical dimensions to how claims are handled. It’s designed to get claims directors through one of those “…but what am I looking for?” moments. On the other hand, to make progress on ethical behaviours in 2015, everyone needs to learn how to spot such issues for themselves.

The second ingredient to ethical behaviour is being able to work out what is the right thing to do, and what is the wrong thing to do. In some situations, it’s easy to differentiate between the two (for example, using information about a claimant that could only have been obtained illegally), but at other times, the situation might not present itself in such clear terms.

There are hard and soft ways of addressing this. A clear code of ethics and training in ethics and ethical dilemmas help a lot. Yet more personal support is also needed. A culture that encourages openness and collaborative working allows tricky ethical decisions to be shared, discussed and resolved. It also allows those who may be about to get this wrong to be challenged.

And the third ingredient to ethical behaviour is to actually act upon that ‘right thing to do’, even if it means a hard choice having to be made. Being willing to back away from a client because of an untenable conflict of interest, or giving back a generous gift from a supplier, are actions that demonstrate integrity. And it’s best in situations like these to be clear with people about the reasons for your decision. Clients understand conflicts of interest (if not technically, then certainly intuitively) and will remember your firm for respecting their interests.

It is around this third ingredient that leadership on ethics (which is required of every director of a UK plc) can make a huge difference. The way in which a firm is organised; how its policies and procedures are used, and; how its people are managed, can all hinder or help people to actually act upon that ‘right thing to do’. This is behind the trend towards greater personalisation of responsibility in the regulation of insurance firms here in the UK.

So it’s great that lots of insurance firms will be looking at ethical behaviours in 2015 ….but to make real progress, they need to pay attention to each of its three ingredients.

Duncan Minty
Duncan Minty
Duncan has been researching and writing about ethics in insurance for over 20 years. As a Chartered Insurance Practitioner, he combines market knowledge with a strong and independent radar on ethics.
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