The insurance business and its image in society: traditional issues and new challenges

This paper investigates the image of the insurance industry in society, at a time when it is confronted with new challenges in the context of globalisation. It notes that while the insurance industry brings numerous positive contributions to society, the industry also suffers from a negative public image. The negative perceptions are due to:

• the opacity of the insurance business with its misrepresentation and miss-selling practices - information about products presented in marketing, advertising or other sales efforts is viewed as untruthful, misleading or incomplete
• the dissatisfaction about the insurance agents' reward system - agents sell unsuitable products to customers to meet sales quotas or boost their earnings as the products give agents higher commissions; the mortgage endowment crisis in the UK illustrates misrepresentation and miss-selling in insurance
• the problems associated with the respect of customers' privacy – concerns have been raised about insurers asking customers for detailed information about their health, especially genetic test information which could be unethical
• the dilemmas related to the consequences of outsourcing decisions – off-shoring operations such as call centres and back office services to countries with lower labour costs may impact on the corporate image of the company
• corporate scandals – insurers and insurance brokers have been implicated in corporate scandals ranging from bid rigging, price fixing, improper accounting methods to overstating earnings.

The paper suggests that the financial services and insurance industry will only be able to rebuild the trust of all its stakeholders if it demonstrates that it understands its responsibilities and operates with integrity. Beyond implementing compliance programmes, defining sets of values and elaborating codes of conduct, the challenge for insurance companies is to live the responsibility dimension in their daily operations and to maintain a high ethical profile through all aspects of their activities.