“Ethics Revisited” Survey Highlights

Survey Flags a Potential Crisis in Confidence
CPCUs “are in the trust business,” according to Norman A. Baglini, Ph. D., CPCU, a professor at Temple University and a member of the panel discussing “Ethics: A Leadership Perspective” at the CPCU Society's 2007 Annual Meeting and Seminars in Hawaii. In the past five years, the property and casualty insurance industry has been roiled by charges of fraud and bid rigging against major brokerage houses, and negative publicity and class action law suits stemming from the denial of homeowners' claims for damages after Hurricane Katrina. Now that these incidents have largely faded from the headlines, what impact have they had on customer confidence? And what progress has the industry made in counteracting the negative publicity and restoring confidence in the business?

Measuring Confidence
In November 2007, the CPCU Society surveyed its Member Opinion Panel and insurance consumers about confidence in the industry, specifically whether customers expected the insurance industry to deliver fully on its promises if a claim was submitted. In addition, respondents were asked whether their confidence had improved or eroded over the last five years, during which time the industry suffered a number of well-publicized allegations of ethical lapses. Participants in the Society's Member Opinion Panel, who last explored the issues of ethics and customer confidence in May 2005, were also asked about measures their employers have taken to restore confidence, and how effective these actions have been. Finally, the role the CPCU Society should play in helping to restore confidence in the industry and promote ethical conduct was probed.

Confidence Gauges
To accurately gauge confidence in the industry and where it is heading, the CPCU Society polled insurance consumers, represented by a national sample of US adults (18 years or older) developed by International Communications Research (ICR), as well as CPCUs participating in the Society's Member Opinion Panel.

Is the Worst Over Yet? And, If Not, What Can Be Done?
Four key conclusions can be drawn from this research:

1. The worst is yet to come. Confidence in the property/casualty insurance industry is on the decline, particularly among prime insurance buying demographics (college-educated adults between 45 and 64 years of age). Industry insiders, as represented by the CPCUs on the Member Opinion Panel, are even more pessimistic about the level of confidence in the business, possibly due to their greater exposure to customer claims and policy renewals. Not surprisingly, one-third of the policyholders in the Southern region of the U.S. report a deterioration in confidence, the largest drop of any region in the country.
2. The industry's response has been somewhat effective. In response to the negative publicity swirling about the industry, businesses have tended to emphasize staff education and training, enforcement of existing codes of conduct, the formation of audit committees or compliance functions, enhanced communications with regulatory agencies, and more emphasis on ethical behavior in hiring and promotion decisions. Two-thirds of CPCUs rate the response to-date as “somewhat effective,” with educating staff and consumers considered to be the most effective of the responses (selected by 17 to 19 percent of member panelists, respectively).
3. The industry will now need to educate consumers and the media. Close to one-half of the CPCUs in this survey would like to see their employers tackle the education of the media about complex insurance issues (49 percent), and launch public relations campaigns to help consumers understand what is and is not covered in their insurance policies (42 percent).
4. The CPCU Society is seen as playing an active role in educating external stakeholders. When asked what role the Society should take to help restore confidence in the industry, the most frequently mentioned recommendations include acting as the ethical voice of the industry, educating consumers and the media about insurance, promoting the industry to the insurance buying public, and increasing the visibility of the CPCU Code of Conduct.

What do you think?
Confidence is critical to a business that relies on trust. CPCUs, through their designation and membership in the CPCU Society, have chosen to abide by a code of ethical conduct. Should the CPCU Society, and its CPCUs, be doing more? We welcome you to e-mail your comments.

For More Details …
Readers can view a report of the detailed findings of the “Ethics Revisited” Member Opinion Panel survey. For even more details, or to view the survey questions and response options, please e-mail Suzanne Kinsler, Director of Marketing and Sales or call (610) 251-2756.