Fairness in Insurance
A challenge to Boards of insurance companies to strengthen their oversight of customer fairness.
Fairness in Insurance, a Dialogue Paper by former APRA deputy chair, insurance company chairman and actuary Ian Laughlin, challenges boards to strengthen their oversight of customer fairness by making regular checks on how the company’s product, pricing and claims philosophies, and other aspects critical to community views on customer fairness, are being put into practice.
In brief:
- Evidence such as complaint levels, adverse publicity and parliamentary inquiries suggests there is a groundswell of views in the community that insurance is often unfair.
- Assessing fairness is not straightforward given the increased sophistication and complexity of insurance products and changing community expectations.
- At the same time, an insurance company is a business supported by considerable capital (normally provided by shareholders), on which it is quite reasonably seeking a return.
- The Board sits in a unique and powerful position for ensuring fair treatment of customers.
- By systematically considering the questions posed in the Paper – particularly how insurers implement product, pricing and claims philosophies - Boards can gain better insights that could markedly improve customer fairness.
Trust, good faith, and fairness are at the heart of the insurance system. If you don’t have strong levels of mutual trust, respect and fair treatment, the system will struggle. That’s because customers are buying something which is intangible – they’re buying a promise, and they expect that promise to be met.
— Ian Laughlin, actuary and author
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