Opinion: With great power, comes great responsibility

The insurance industry is a heavily regulated industry, which should come as breaking news to no-one reading Insurance Times. 

What does require further consideration, however, is what position that regulated character puts the sector in. 

At their most fundamental level, the companies that populate the industry exist to generate revenue and create profit by providing products or services to their customers – again, this is not exactly stop the press stuff. 

However, this academic understanding of the role of companies is complicated by the introduction of regulations that can ban, recommend, suggest or require certain behaviours and actions. 

There is no better example of the fact that regulation stands fundamentally opposed to pure profit than the past year or so’s lead up to the implementation of Consumer Duty, which came into force on 31 July. 

The process of preparing for this regulatory deadline was the topic of much discussion in the industry, with the majority of column inches devoted to the extra costs and burdens compliance foisted upon insurance companies. 

Now, just because regulation is opposed to profit, this does not mean that the decision makers in the industry are anti-regulation – almost unaminously, executives and others from the sector support the intention of regulation, which is to protect customers and the sector itself. 

Rights and responsibilities 

So what am I going on about? Essentially, my point is that the insurance industry accepts that, sometimes, its role goes beyond a simple trade of products and services for customers’ money. 

With the rising importance of environmental, social and governance (ESG) considerations, almost every company operating in the insurance sector now accepts that its responsibilities to customers and wider society extend out beyond the profit motive. 

While this may not be unique to the insurance sector in the modern day, the industry does play a somewhat unique role in facilitating other business and processes – as the oft-repeated phrase goes, “nothing happens without insurance”. 

Insurers and brokers hold the keys – people and other companies could not drive a car, build a bridge, organise a shipment of grain or launch a satellite without an insurance policy. 

And as Uncle Ben tells Peter Parker before he becomes Spider-Man: “With great power, comes great responsibility.”

In this month’s cover story, contributor Jon Guy explores the insurance implications of the debanking scandal that saw ex-UKIP leader Nigel Farage refused access to a bank account because of his political beliefs.

Whatever your opinion on the man, the scandal raised an important question over the responsibilities of financial services firms that provide the tools to operate in modern life. 

Workers at Coutts Bank, which it was revealed denied Farage a bank account because of his political opinions, placed partial blame for their decision on the desire to not harm the organisation’s reputation. 

You could argue that this was the bank deciding that it had a responsibility not just to profit, but to act ethically. However, to me at least, the decision was completely unethical. 

As keyholders to modern society, banks, financial services companies and insurers should all accept their responsibility to provide services to all, regardless of their political opinions. 

No-one wants to live in a world where an unaccountable company can restrict access to society based on speech – and, as Guy reports, the regulator certainly doesn’t.