Good reputations that have taken years to build can be lost in a moment. But have insurers ever had a good reputation, asks
Two years ago, it would probably have been possible to gloss over the topic of ethics in business. It was important, of course, but it wasn't a burning issue. If business was a body, ethics was its skeleton - absolutely essential, but not visible beneath the living surface.
Now, of course, the business world has suffered some high-profile breaks and fractures. Enron, Arthur Andersen and others have entered the business hall of infamy thanks to a catastrophic disregard for basic ethical behaviour.
In the mind of the public our own industry is also blighted - think Equitable Life, Independent, pensions mis-selling and endowments. And then there is the old chestnut that we strive endlessly to avoid paying claims. Our customers no longer seem to trust us and the insurance brand is not appreciated. Little wonder there isn't an insurance brand in the world's top 100.
How can we flourish with no brand impact? If we command little trust or respect, how will we attract and retain customers?
We live in an age of unparalleled transparency and accountability. Consumer power means people feel emboldened to ask questions and demand answers. This is also the era of regulation. All sectors are subject to intense official scrutiny, which reduces the scope for sharp practice. In other words, we have to be professional to survive; and we will only flourish if we adopt the right ethics.
Living in the information age means news travels fast - bad news travels faster. If wrongdoing is uncovered, you can be sure everyone will hear about it in no time flat. Reputation is one of the most important assets a business can possess.
If you lose your reputation, you risk losing everything. Aon recently conducted a survey which concluded that reputation can account for up to 75% of a company's value.
Professor Arnold Schilder of the Netherlands Bank summed up the effect of the Enron affair on Arthur Andersen: "What the firm shredded were not documents - it was their basic ethics. Arthur Andersen destroyed the trust it had earned over 90 years."
So reputation is a big ticket issue. Do we have explicit ethical strategies and structures within our businesses? Do all our people share the same values and objectives? Do we have adequate protocols to ensure our integrity remains intact? How are we rebuilding the trust that we have lost?
Reputation and business ethics matter. Any more broken bones and we may never be able to hold our heads high again.
Tim Ablett is managing director of Groupama Insurances
