Improving professionalism in insurance

Vol 47: Issue 3 | October 2024

In short

• While many APAC countries have their own insurance qualifications and codes of conduct, there are no universal benchmarks for insurance professionals.Lapses in professionalism can damage the industry’s public image, leading to diminished consumer confidence and increased scrutiny.
• In addition to education providers such as ANZIIF, regulators have an important role to play in enforcing ethical standards and behaviour in insurance.

When former ANZIIF board member Allan Reynolds started his career in insurance, he was offered the chance to gain formal qualifications through a local insurance business. It was an opportunity that took him to Deakin University to complete a business studies degree (insurance) and helped shape his career, which has now spanned more than five decades.

“I was fortunate that when I first got into the industry, I had an insurance company in Shepparton [in north-east Victoria] pay my way through university, so I always had the desire to give back to the profession and help it grow,” says Reynolds, who in his retirement is a non-executive director of various subsidiaries at Steadfast Group Limited.

Throughout his career, Reynolds continued to gather qualifications, and he has become a strong advocate for establishing a standard program of ongoing education for insurers across all areas. He says a central body, such as ANZIIF, has a significant role to play in this effort. However, he also notes the challenge of standardising professionalism in an industry with numerous training and education options.

“I have always argued that we need a consistent standard of professionalism,” he says. “While there are some really good providers with visions similar to ANZIIF, there are others more focused on profits than on the quality of their programs.

“If you’ve got different bodies providing their own version of qualifications, then how are you going to be able to satisfy the regulator that you do have a standard against which people can be measured?”

As one of those regulators, the Australian Securities and Investments Commission (ASIC) influences professionalism in the insurance industry by regulating and enforcing laws that ensure fair, transparent and ethical practices.

“Our responsibility for acting against misconduct in financial services, including insurance, continues and we have recently taken action to ban [some] people working in insurance from providing financial services or brought criminal charges for some of the most serious offences,” says an ASIC spokesperson.

ASIC also mandates certain education and qualification standards for individuals working in the insurance industry, especially those providing financial advice.

“Reforms introduced after the financial services royal commission require all advisers, including those advising on insurance, to have a professional qualification, to have passed the Financial Adviser Exam, to participate in continuing professional development and to comply with a code of ethics,” the spokesperson says.

Professionalism in insurance refers to upholding high standards of competence, ethical conduct, regulatory compliance, client-focused service and adherence to industry best practices, says Dr Junaedy Ganie, independent commissioner at Allianz Indonesia (General, Life & Pension).

He argues that maintaining professionalism through mechanisms like certification, standard dispute-resolution processes and disciplinary bodies is essential, and continuous efforts across the sector are needed to elevate insurance to the level of other respected professions.

“When I started my career, access to insurance training and education was very limited, but as the industry has grown that has changed and the levels of professionalism have transformed dramatically,” says Ganie.

“Like many other professions, as the insurance sector adapts to technological advancements and changing market dynamics, a unified approach to professional standards will become even more essential for ensuring trust and maintaining integrity.”

“Globalisation and technological advancements have impacted and changed the industry. For example, innovations in technology are influencing a wide range of insurance practices, from customer experience and claims handling to market competition, risk management, governance and regulatory compliance.”

This evolving landscape reflects the need for continuous adaptation to meet new demands and challenges, Ganie adds, and to establish a standardised approach to providing service that will benefit both insurers and their clients.

The risks of not having a universal benchmark

Unlike medicine, law and accounting, which have the advantage of well-established international frameworks and consistent standards, insurance lacks a universal benchmark for qualifications and professional practices.

This lack of uniformity undermines trust and credibility with clients and stakeholders, making it challenging for consumers to assess and compare service quality reliably, argues Ganie.

The absence of a unified vision also complicates regulatory compliance, he says. Diverse approaches to professionalism can create confusion and difficulties in adhering to regulations, increasing the risk of legal issues and potential penalties.

This fragmentation extends to market dynamics, making it harder for companies to compete effectively and for consumers to make informed choices.

Operational inefficiencies are another risk. Without a common framework, insurers may face duplicative efforts and increased costs, which can negatively impact overall industry performance.

“Continuing to advance professional standards and qualifications is crucial for enhancing the insurance industry’s ability to effectively deliver its services,” Ganie says. “If we don’t, it will lead to an overall decline in the insurance business.” 

Perhaps most importantly, variability in professionalism can damage the industry’s public image, leading to diminished consumer confidence and increased scrutiny.

“To avoid these risks and ensure a cohesive, effective and trusted insurance environment, it is crucial for the industry to embrace a shared vision of professionalism that promotes consistency, high standards and integrity,” says Reynolds.

In medicine, globally recognised guidelines and certifications, such as those from the World Health Organization, ensure a high level of professionalism.

Similarly, accounting standards like International Financial Reporting Standards, along with designations such as certified practising accountant (CPA) and chartered accountant (CA), provide a consistent framework for ethical and professional practice.

In contrast, the insurance industry has diverse national frameworks and industry-recognised certifications that vary widely across regions and organisations.

Australia and New Zealand have a strong focus on industry-recognised certifications, as well as some university courses. Many countries in Asia also offer a range of international and regional qualifications with significant diversity due to the varying regulatory environments and educational systems across different countries.

The issue isn’t that people working in insurance lack qualifications or professional development opportunities, Reynolds argues. Rather, the problem lies in the multitude of competing options and the absence of a unified standard, which leads to confusion and inconsistencies in professional development.

“All of the organisations I’ve worked with encouraged people to get their qualifications and, in fact, would pay for the costs or reimburse [employees] on successful completion,” says Reynolds.

Those qualifications in Australia and New Zealand can range from the foundational Certificate IV in Insurance Broking to the Certified Insurance Professional (CIP), which recognises advanced knowledge and skills in insurance and risk management.

However, without a clear, cohesive framework, ensuring that all professionals meet the same high standards becomes challenging. This inconsistency can affect consumer trust, have an impact on the quality of insurance services and create difficulties for professionals moving between different regions or roles.

“It is vital that the leaders of the profession work together towards a common goal of maintaining and improving standards and making sure that the programs that are offered are relevant in today’s market,” says Reynolds. “For that purpose, I believe ANZIIF is the pre-eminent body for providing training and professional standards that enable people to be qualified and increase the professionalism of the business.”

Industry codes: pillars of professionalism

In Australia, New Zealand and Asia, industry codes for insurance play a vital role in upholding professional standards and ethical conduct. These codes are designed to complement formal qualifications by offering practical guidelines and expectations for behaviour within the industry.

The Australian General Insurance Code of Practice provides a framework for ethical practices and customer service. Similarly, New Zealand’s Fair Insurance Code sets out clear obligations for service quality and transparency. Across Asia, the diversity of regulatory environments and industry practices means that codes of conduct can vary significantly.

However, many countries have established their own industry codes or align with international standards to promote professionalism and integrity.

For example, in Hong Kong, the Insurance Authority has issued two separate codes of conduct, namely the Code of Conduct for Licensed Insurance Agents and the Code of Conduct for Licensed Insurance Brokers. These codes outline principles of conduct and related standards and practices that licensed insurance agents and brokers respectively are expected to comply with when carrying out regulated activities.

Together with formal qualifications, these industry codes can help create a robust and reliable insurance industry by setting clear expectations for professional behaviour.

“The insurance industry is continually evolving to meet the changing needs of its customers while maintaining high standards and ensuring robust processes are in place to protect New Zealanders’ trust in insurance,” says a spokesperson from the Insurance Council of New Zealand (ICNZ).

“Those standards, and the processes to back them up, are set out in the Fair Insurance Code, which all ICNZ members follow.”

The other part of the puzzle is ongoing learning and training opportunities, says Andrew Hall, CEO of the Insurance Council of Australia (ICA).

“Insurance is a cornerstone of a resilient Australian society. The integrity and expertise of insurance professionals are crucial in maintaining public trust, which is essential for the sector’s success,” says Hall.

“As a profession, insurance demands a commitment to ethical standards, customer-focused practices and continuous learning to adapt to a changing risk landscape.”

Adapting to change and addressing complaints

The insurance sector is currently facing several challenges, including adapting to rapid technological advancements, meeting evolving customer expectations and navigating complex regulatory environments.

Additionally, issues such as data privacy, market competition, emerging risks like climate change, economic uncertainty and talent acquisition are also concerns that insurers must address to stay competitive and ensure operational resilience.

Hall points to the role of industry bodies in helping insurers adapt to emerging challenges.

“As the industry faces new challenges from emerging risks and technological advancements, ANZIIF’s role in providing training and thought leadership will continue to be important to the ICA and its members,” he says.

Emma Curtis, Lead Ombudsman for Insurance at the Australian Financial Complaints Authority (AFCA), says the independent dispute organisation views professionalism as how the insurance industry treats its customers.

“We acknowledge there has been immense pressure on the industry over the past few years, with severe weather events, supply-chain and labour issues, and resource constraints. As a result, we have seen a 50 per cent increase in general insurance complaints to AFCA over the past few years,” says Curtis.

“Professionalism is setting and following high standards of customer care, particularly at claim time. This means not only acting in accordance with the industry code of practice but striving to provide customer service at or above the standards set out in the code. Overall, it’s about treating customers with fairness, respect and care.”

When that doesn’t happen, AFCA receives customer complaints that commonly relate to delays without explanation or regular updates to the customer. “A lack of professionalism decreases trust and satisfaction. It can result in a higher number of complaints coming to AFCA. In the last financial year, we received almost 30,000 complaints in general insurance and the most common issue was claim delay,” says Curtis.

“We also see complaints where insurers are relying on expert reports to decline a claim where the information in the report is not consistent with the expert’s conclusions or may be open to interpretation or is not consistent with the insurer’s decision to decline the claim.

“The code of practice review, along with the federal parliamentary inquiry into insurers’ responses to the 2022 floods, will help identify areas for improvement to help reduce the number of issues consumers are experiencing.”

Investigating systemic issues is also an important part of raising standards in the industry, she says. “We are required to identify, investigate and report systemic issues to the regulators to ensure better outcomes for consumers and minimise consumer complaints.”

In the face of current challenges, unethical business practices can emerge in a highly competitive environment, says Ganie, and for that reason, rigorous professional standards are necessary to address these challenges.

“It is crucial for insurance institutions to establish a robust system to monitor and address any allegations of professional misconduct or breaches of ethical standards among their qualified professionals, similar to the standards seen in the legal profession,” he says.

Collaboration in the industry

In New Zealand, the three insurance sector representative groups — ICNZ, the Financial Services Council and the Financial Services Federation — have worked together to address future challenges, says the ICNZ spokesperson.

“The three groups have taken the opportunity to deepen the relationship with regulatory bodies such as CoFR [Council of Financial Regulators] to assist with the BAU [business as usual] of the regulatory environment.

“But importantly, it is also to ensure regulators and industry are preparing the ground for the longer-term challenges, such as climate change and the impact that will have on our sector and our customers.”

Collaboration among the sector’s peak bodies is important to work out what a consistent standard would look like, says Reynolds.

“Regulators like ASIC may enforce the rules, but it’s up to industry bodies like ANZIIF, the National Insurance Brokers Association and ICA to collaborate and set a cohesive standard that aligns with both regulatory requirements and the practical needs of professionals,” he says.

By working together, the industry can create a more consistent and reliable framework that not only meets regulatory expectations but also fosters consumer trust and professional excellence.

“Employers — whether it’s the insurance company, the loss adjuster or the broker — have to have buy-in to understand the importance of professionalism and the importance of qualifications,” says Reynolds. “It’s a challenging but essential task to ensure that the insurance sector maintains its critical role in society and continues to evolve in response to new risks and opportunities.”

Insurance education in Asia

Through his role as ANZIIF’s ambassador to Hong Kong, Tony Lee, chief agency leader at Marsh Hong Kong, is actively promoting insurance education to practitioners in Hong Kong and mainland China.

Many universities and other education providers in the region, and Asia more broadly, offer courses in areas spanning risk management, insurance and actuarial science. However, there is no universal requirement for those entering the industry to complete a professional qualification — though employers do value it.

“From the industry perspective, we prefer to recruit people who have professional qualifications, and professional learning opportunities are encouraged and supported by both employer and local regulators,” says Lee.

Having set its sights on enhancing professional qualifications and knowledge in the region, ANZIIF has co-organised continuing professional development training courses in recent years with the Hong Kong Federation of Insurers, the Confederation of Insurance Brokers and the Professional Insurance Brokers Association, covering topics such as cybersecurity, underwriting and claims. 

In addition to improving education uptake, Lee believes increased professionalism can be achieved by “promoting the relevant professional learning opportunities for young people and educating the public about the importance of professional risk transfer and insurance arrangements”.

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