Saviour or Saboteur? In insurance, intent is everything.

For an industry founded on helping people during the worst moments of their lives, insurance suffers surprisingly poor PR. Research conducted by Roy Morgan indicates that the insurance industry is among the least trusted professions in Australia, rating barely ahead of car salesmen in terms of public perceptions of trustworthiness.

This reputation persists despite insurance being crucial for the quality of life for the vast majority of Australians, not to mention for the successful function of society, removing as it does the catastrophic loss which circumstance can easily visit upon any person. For professionals in this field, such a negative regard for their work must seem ungrateful at the least, and potentially lead to depression and resentment where it becomes acute – surely providers of such an essential service should be granted some modicum of respect?

But perhaps it is that very essential nature of insurance itself which leads to the disrespect the field is shown – after all, no one wants to have to rely on institutions that they do not trust. And given that the insurance industry’s financial interests are explicitly against paying out on claims by their customers, it is very easy for those customers to assume that their insurer is more interested in their money than they are their welfare. In fact, if we are to be frank, it could be argued that the insurance industry has a direct conflict of interest against fulfilling any positive role within society whatsoever.

However, this same accusation could also be made with equal accuracy against highly regarded, even venerated professions; doctors, firemen, police, paramedics, and even nurses (consistently ranked the #1 most trusted profession each year) all have careers that depend on the pain and suffering of their clients in order to exist. Indeed, unlike insurance, one could argue that the ultimate goal of the medical or emergency services professions is to make themselves redundant – the largest conflict of interest it is possible for a profession to have.

And yet despite several instances of firefighters starting blazes in order to see some action, these professions are still held in significant esteem, while insurance is dismissed as untrustworthy.

There has been significant discussion surrounding this poor reputation, with most commentators focussing on communication with customers to demonstrate insurers’ commitment to their welfare, and to address any concerns or distrust that may exist. But these methods only address the problem on a superficial level, are likely to be seen as insincere at best, and may even worsen customer opinions if sufficient distrust already exists.

Addressing this level of distrust in the industry requires a more fundamental approach; to put it simply, it requires demonstrated proof. This is not simply a question of practical outcomes but rather of how insurers interact with their customers over a period of time – and this raises the question of intent.

The goals an organisation sets determines how it conducts itself. A focus purely on financial outcomes for the organisation will therefore encourage behaviours that lead to financial outcomes alone – all other factors, including customer satisfaction, operational sustainability, health outcomes, ethicality and even legality, become secondary. Complicating factors that must be managed perhaps, but not metrics for the successful operation of the organisation, to be rewarded on par with achieving financial outcomes. And so, they are neglected, because there is little incentive to care about them, and plenty of disincentive for a lack of focus on the purely financial.

The irony of this is that such an exclusive focus inevitably undermines itself, as the CommInsure scandal in 2016 so clearly demonstrated. There is no question that redefining medical conditions to prevent paying out claims was great for the financial performance of CommInsure, at least in the short term. However, such flagrant disregard for the welfare of its customers, not to mention the profound harm it caused in terms of their health, and the subsequent legal consequences, has significantly damaged their brand, and thus the financial performance of the business in the mid- to long-term.

Such results serve as rock-solid proof to the public that the insurance industry is not trustworthy. While it may not be fair to tarnish the entire industry with that brush, the lack of a counter-example demonstrating insurers wilfully sacrificing profit to protect customer interests, means this narrative cannot be countered effectively – hence the failure of the communication approach recommended by some.

To rebuild confidence in the insurance industry, insurance businesses and professionals must demonstrate that the welfare of customers is a core objective, not just a factor to be managed where necessary. And demonstrating such a commitment comes down to the question of intent – by making customer outcomes a core objective, held on par with financial outcomes, the conduct of a business will shift to reflect this prioritisation.

The concept of ‘shared value’, as pioneered by Harvard academics Michael Porter and Mark Kramer, provides an excellent framework for this paradigm shift. This concept states that no business or industry can be viewed as separate from the social context they operate within, and that social progress must therefore form a core component metric for the success of any business.

As an institution founded on helping people during the worst moments of their lives, the insurance industry is ideally placed to adopt this approach, working not only to profit financially, but for the betterment of its clients and society as a whole. And while the process of re-establishing trust with the public will be a gradual one, requiring demonstrated effort from the industry. But if doing so can gain it the same esteem as other professions that help the public, then that is worth the effort.