Non-financial misconduct: Is the insurance industry proactively calling out bad behaviour?

Is the insurance industry in danger due to the inappropriate behaviour and culture that has manifested in recent times on the London market? And is the sector doing enough?

These were the questions posed by Branko Bjelobaba, managing director at  consultancy Branko,  as he addressed the audience at Lloyd’s Old Library in his talk on non-financial misconduct earlier this month.

He referred to the FCA’s ‘Dear CEO’ letter to broking chief executives, which aimed to clamp down on inappropriate behaviour by highlighting key areas of concern.

Bjelobaba said: “The FCA want a culture of openness and honesty where there is ethical leadership and where everyone feels comfortable at work and where concerns are listened to and acted upon. And where people are not vilified or hounded out simply because they have raised a matter of concern to them.

“Are we able to call out bad behaviour and are employers facilitating a mechanism to allow this to happen? Do people know that their behaviour is simply unacceptable and it is causing harm to their colleagues? And if they themselves are senior managers, then their own employability could be called into question.

“The very fact an employee feels uncomfortable in reporting an incident reflects back on the firm and the prevailing culture.”

The FCA’s challenge, said Bjelobaba, is to create a culture that recognises the views of all employees - this correlates to previous FCA research, which found that 71% of respondents believed that industry culture had to change because the market cannot identify nor challenge poor conduct.

Drinking alcohol during the day was flagged as a cause of bad behaviour.

Why culture?

But the big question, Bjelobaba said, was why did this culture come about in the first place?

Turning the question to the audience, he asked if they had experienced any form of unwelcome attention in the last 12 months at work - be it physical, verbal or written?

Only three people raised their hands. This suggests that the problem has not disappeared, even if it is improving.

He referenced the email incident at Guy Carpenter that led to a senior staff member being fired and having to explain himself to the FCA.

Chartered status

Citing that there are 6,000 general insurance firms in the UK, Bjelobaba said that creating a positive culture across these businesses is a large task for the FCA and was surprised that fewer than 200 firms had opted for the pinnacle evidence of culture that of CII chartered insurance broker status. 

He said you never see accountants running away from being a firm of chartered accountants so why is insurance broking so different as surely more a profession than a trade?

Bjelobaba gained chartered status at just 24 years of age, he later founded his own  insurance compliance consultancy called Branko Ltd having worked across the insurance sector since 1987. 

Meanwhile he questioned what a “good and healthy culture” even looks like.

“You can’t do anything without insurance and sometimes these awkward problems are made out to be a lot worse than they are,” he said. ”It’s down to us collectively to behave in a better way and make insurance a great place to work in.”

But he concluded that things are changing.