Ethical Business Practices Essential to Success in Today’s Marketplace
Many insurance companies are discovering a basic truth. Integrity in business is more than just the right thing to do-it is critical to success in an increasingly complex and dynamic marketplace.
When I look at where we are these days-investigations by Eliot Spitzer, more regulatory scrutiny than ever before, the news media calling some products “scams” and some sales process “abuses”-it paints a grim picture. Questions about annuity sales to seniors, news reports about insurance sales abuses directed at military personnel and investigations into reinsurance have raised questions about the integrity of the financial services sector.
Insurance companies and professionals sell peace of mind-so when consumers don’t trust us, we have a big problem. That means we must manage our reputations just as we manage our other assets. Earning, maintaining and communicating trust to consumers has evolved from simply good public relations into a key component of an organization’s and producer’s financial and business plan, and an element of bottomline success.
That kind of commitment to ethical business practices requires ongoing dedication and resolve from all professionals throughout the industry. There are three ingredients necessary for earning and keeping trust-openness, honesty and good customer service. But what does this mean and how can this be achieved?
As a CEO, while I know much of what goes on in my company, it’s tough to keep track of everything. We’ve put into place a strong compliance program with our ongoing membership in the Insurance Marketplace Standards Association. Thanks to our IMSA qualification, my company has strong, rigorous compliance policies and procedures that, in some cases, surpass state insurance regulatory requirements. In the end, it all adds up to good customer service. Through the IMSA program, we maintain a corporate culture of compliance that is pervasive throughout the company.
There are a few key elements of this kind of business culture.
Quality communications. Communication between management and throughout an organization through the field force must be ongoing, clear and concise.
Needs-based selling. Every sale should be based on a thorough look at a potential customer’s financial needs and objectives, and an honest, easy-to-understand presentation of a product and its features to the perspective buyer.
Fair competition. Sales representatives should be provided proper training and key information necessary to follow proper compliance procedures and regulations. They also should use accurate information about their products and companies they represent to foster vigorous, fair competition.
Effective, responsive in customer service. This boils down to an easy rule: we should be giving customers the same service we would expect for ourselves.
Greater professionalism. Because of increasing product complexity, consumers will demand greater professionalism from producers and companies.
Unfortunately, no organization or system is perfect. Even when companies, agencies and firms put into place and foster a strong compliance program, there may still be problems. But the advantage of having rigorous policies and procedures is that you can identify and stop small problems or technical violations before they become widespread.
Ethical business practices make good business sense. Consumers are looking for companies and sales representatives that they believe are treating them with honesty and integrity. Satisfied customers are repeat customers and can be the best advertisement for your business.
Eugene Choate is president, Bankers Fidelity Life Insurance Company, and chairman, Insurance Marketplace Standards Association. For more information, visit www.imsa.org.