Reputation. Reputation. Reputation... Kirsty reviews this week's news
Reputation was the word of the week as we saw Hiscox acknowledging the damaging fallout from the BI test case, the CII shared four areas of reputational risk for brokers to be aware of and there was a significant social media misstep from someone who should know better. Kirsty reviews some of the stories making the news this week.
Risks “four” brokers
This week, the Chartered Insurance Institute’s Society of Insurance Broking (SIB) shared four key reputational risks that brokers need to address in order to improve customer trust and protect the reputation of the profession.
As reported by Katie Scott in Insurance Times, the SIB has flagged four areas; diversity & inclusion, a lack of mandatory qualification requirements, the recommendation of unrated insurers to customers and lastly commission-based remuneration practices.
Against the backdrop of a dip in consumer trust in the insurance profession as a whole, largely due to the fall-out from Covid-19, I think it will be crucial for all market players to turn the mirror inwards and reflect on areas where they might be vulnerable to reputational risk and look at how they can improve their practices and procedures to better meet the needs, and expectations of customers.
Brand damage
Now that the business interruption test case and appeals process has wrapped up, insurers are beginning to count the cost of the Supreme Court judgement on valid non-damage BI claims, but for many the lingering reputational cost is likely to count for more than the pay outs to disadvantaged policyholders.
As reported in Law360, Bronek Masojada, Chief Executive of Hiscox - one of the eight insurers in the test case brought by the FCA - stated this week as the firm posted losses of $268.5m, it had “undoubtedly suffered some brand damage” this year.
As more insurers reveal their 2020 results it will be no surprise to see the significant impact Covid-19 claims will have on some in the industry, but when it comes to reputational damage, and the loss of potential future revenue, it will be difficult to understate the long-term impacts this might have.
What next?
Though “risk of emerging infectious diseases” appeared on Swiss Re’s very first ‘Systematic Observation of Notions Associated with Risk’ (SONAR) report back in 2013, many businesses couldn’t have foreseen just how massive and widespread an impact the event would have globally. But they know now. Many scientists predict that this is not the last we’ve seen of a global pandemic with a whole host of infectious diseases waiting in the wings for their moment to cause havoc. Having lived through the effects of Covid-19, we can only hope that society can be much better prepared for the next time.
For the insurance industry that might mean the implementation of a Government-backed pool to cover costs, it will definitely mean a closer scrutiny of policy wordings for any and all ambiguities and the need for brokers to add greater value in advising customers of the right protections for them and their businesses. It will also necessitate much clearer, quicker communication with policyholders, so they don’t feel left in the dark or that their expectations have not been met.
And lastly, reputation, built over years, lost in seconds
We expect PR professionals to be right on the money when it comes to reputation risk, it is after all, our bread and butter, but one PR boss this week found himself on the wrong side of public scrutiny when he posted an update on LinkedIn that managed at once to be racist, homophobic AND sectarian.
Gordon Beattie, Chairman of Beattie Communications hailed by The Times as “one of Scotland’s most successful public relations experts” was forced to apologise and resign after he established his company’s diversity and inclusion credentials … by showing a lack of tact and sensitivity worthy of Justine Sacco (of #HasJustineLandedYet infamy). It was an outstanding misstep for someone who makes a living managing the reputation of others and a timely reminder that a hard won reputation can be easily lost.