Ethical Delivery: Q&A with Duncan Minty!

London based Duncan Minty has built a solid reputation as an established independent consultant specialising in business ethics, with a particular interest in the insurance and financial planning sectors. Through his expertise, Duncan is able to deliver greater certainty for clients on ethical risks and opportunities, thereby building trust, reduce costs and enhance service.

The specialties he focuses on being: Business Ethics, Insurance, Identifying ethical priorities, Performance measures for ethical issues, Embedding ethics into management systems, Ethics Training Courses, Privacy and Conflicts of interest.

Q: Insurance is a service industry. We do not distribute products, we deliver service. Is distribution to delivery to ethical delivery a logical progression?

A: I see ethics more as a seam running through both distribution and delivery. Get the ethics of your distribution right and the customer is going to be primed and ready for what they’ve really bought, which is good service. This helps the policyholder see the insurer in more of a partnership light and less of a ‘them and us’ one. The ethical ingredient to your service then sets up the relationship for when claims occur, with trust rather than confrontation being the watchword. If you see your business as a suite of different functions, then you’re less likely to see this logical progression. See it as a set of joined up cogs and the progression is clear.

Q: Charity begins at home. First thing first, how does one get this right throughout the hierarchy of an organisation?

A: I think you enshrine it in your company values, then give expression to it as a part of your business plan and finally, but most importantly, you set a clear and unequivocal example. A company that doesn’t include ethical objectives within its business plan can hardly be said to have an ethical culture. There’s also an extra dimension to ‘charity begins at home’, namely that it reminds you not to drop the values and empathy you have for others when you leave for work. Your personal ethics should guide your decisions at work as well as at home. And listening to the concerns of others and showing them respect and leadership can be characteristics of a successful business person just as much as a successful family person.

Q: Insurers deal with multi-channels. Some are captive and some not. How do they bring consistency across the entire spectrum of reach? Many of the partners are outsourced entities like call centres, loss adjusters. They may perform at various levels of ethical behaviour. How does an organisation align them into an overall consistent game plan?

A: Firstly, you need to choose your partners carefully, taking account of how they work to their personal, corporate and professional values just as much as how they charge for this or that service. Ask them to give you some concrete evidence of how they put this into practice, rather than try to work it out for yourself. Then be clear about your expectations of their behaviour when acting on your behalf, showing what is acceptable and what is not. So for example, if you want adjusters making your claims decision to never use information obtained by illegal or unclear means, then write that into the loss adjusting service agreement, with penalties to match. In essence, it’s all about transparency, accountability and consistency.  

Q: It is about getting both the physics and chemistry right. You may have a great structure and process – how do you get it right at the feeling level? Is it about fool-proof embedding?

A:  Having someone at the top of the company who sets the right ethical example and encourages others to follow his/her lead helps a lot. Get those two things right and more likely than not, you’ll end up with a corporate culture that encourages openness and discussion. When people then feel they have a voice in your firm, and will be listened to, you get a lot more understanding and accountability.

 Look at this from the other way round: the danger with closed cultures is that the chemistry can sometimes become rather active and blow up when no one realises it!

 I think that fool-proofing embedding comes from being very clear about “walking the talk” on values and ethics: making sure that they’re actively used in decision making, even when it may result in business being lost. People realise the firm is serious about ethics and adapts their personal behaviour to match it.

Q: How does an ethical conduct of delivery impact overall governance within an organisation and vice-versa?

A:  It’s clear now that if those overseeing the governance of insurance delivery in the UK over the last 20 years had paid more attention to the rights and wrongs of what they were doing, then the sector would have a much better reputation and be better off to the tune of many, many millions of pounds of compensation. Those in governance have a tendency to focus on internal controls and procedures, and to fail to stand back enough and consider the ethics of how products were being used by distributors. Then they would recognise that how products are designed and priced has an influence on how ethically they’re likely to be delivered, something that the itemised thinking behind a lot of governance can’t spot. That said, fusing together governance thinking and ethics thinking can work in those markets with a more ‘rules based’ approach to insurance regulation, the US being one such instance. The UK now has a more principles based approach and insurers are trying to adopt accordingly.

Q: Does ethical conduct tantamount to treating customer more than fairly?

A:  I don’t see it that way, for no other reason than that would imply that treating someone fairly was less than ethical. Fairness is a key part of ethical conduct, yet fairness also has more than one dimension, so is often misunderstood. This is evident at the moment in the UK with regard to the provision of flood insurance. I think fairness is a good theme for customers to connect with (better with a fairly technical term like ethics) and if you embue your overall delivery strategy with fairness, that goes a long way to satisfying many customers. Remember though – you can’t deliver one type of fairness to one set of customers and another type of fairness to another set of customers. So yes, follow the ideas behind fairness, but keep it balanced.

Q: Can there be shades of ethical conduct? Moving from distribution to delivery to ethical delivery – is it evolutionary or revolutionary?

A:  I don’t think there are shades of ethical conduct per se, but I do think that ethical conduct can be a journey rather than a destination, and a journey with the odd bump and wrong turning along the way. So the shades come in more around how far you are along that journey and the extent to which your ethical road is bumpy or unclear. The business world is always in some state of flux and coping with what it throws up is always going to be presenting your firm with ethical challenges. That is healthy, for it keeps us on our ethical toes and reflecting on what we are doing. The firm who says it’s got its ethics all sorted out and dealt with is, I fear, a firm that is failing to reflect on what is going on around it and adjusting accordingly.

I think that a firm’s ethical journey can be evolutionary at times and revolutionary at times, depending on what it is experiencing in its business sector. I think that insurance claims in the UK is about to undergo an ethical revolution – the clever insurers will be those who anticipate the need for revolutionary change and take those steps now themselves, rather than be forced to in the way required by the regulator.

 What needs to be remembered about evolutionary change is that it may be relatively slow and long term, but it is extremely powerful and ruthless, with the weakest dying away and those most tuned to their environment adapting and thriving. The survivors recognise what is going on around them, tune in to it and adapt to the necessary conditions of survival. Evolution is not a soft option.

Q: How do you audit & ascertain ethical consistency?

A:  I think that examining a firm’s ethical culture will illuminate a lot about its ethical consistency. The essence of this approach is to look at what the firm says, then at what the firm does and then at where (and why) the two are different. The findings can be both surprising and exciting, as they can unearth some hidden truths (at least hidden to the firm, not necessarily to its customers!) and show some long term infuences that are still making an impact. You can expect to hear more about ethical culture as issues about how insurance claims have been handled in the UK are exposed by regulators here. 

Q: Is it ethical to treat ethical as a differentiator?

A:  It certainly is, for your customers have the right to know they can put more trust in your firm and as a result choose to buy your products more often. This differentiates your firm in the market and earns you reputational and financial rewards.

 That said, you shouldn’t act ethically just in order to differentiate your firm. Differentiation on ethics is an outcome of being ethical and shouldn’t be its raison d’etre in the first place. Think of it this way: if you act on your values and ‘do the right thing’ only when it is profitable to do so, then it hardly seems right to give up your values when it happens to become less profitable.

Q: How important is ethical delivery for emerging markets? Are there any learnings from the more developed ones?

A: Ethical delivery is just as important for emerging markets as it is for the more established markets. That’s because the same mix of customers, providers, intermediaries, suppliers and regulators are present in both. There’s no case to be made for customers in emerging markets expecting anything less than customers in the more established markets.

 It is however unfortunate that a lot of what can be learnt from the more developed markets are the type of ethical shortcomings that need to be avoided: I’m thinking of mis-selling in particular. Emerging markets are well positioned to see how to avoid repetitions of such scandals – it’s down to regulators, professional organisations and insurance leaders to emphasise just how important it is to steer clear of such misdeeds.

 Are there more positive things to be learnt, other than simply how to avoid the mistakes? To a degree, yes. Emerging markets can test out some of the processes that have helped firms in more established market achieve better ethical outcomes, but they must do so with a clear agenda to adapt them to their own market’s circumstances. A key part of developing an ethical capacity is learning not what others have decided are the answers, but the process by which to ask the right questions of yourselves and how to implement the answers that come out of that.