The importance of reputational risk control and management in the insurance industry

Reputation is an important factor in differentiating entities in the insurance services market and creating relationships of trust, both with service users and with all stakeholders. The issue of reputation in the insurance industry is very complex and can be viewed through the prism of the assessment of various stakeholders and/or the general public on the way a particular company manages its business, as well as the quality and efficiency of providing insurance services. It is not uncommon for the creation of a business and reputation rating of a particular company to be the result of various marketing activities within the company, but without a longstanding effect. In the long term, reputation in the insurance industry is always closely related to the issue of trust of clients, i.e. various stakeholders in the process of providing insurance services. Reputational ratings in insurance can suffer a lasting damage due to the perception of service users and/or the general public that a certain entity performs its activities irresponsibly, unscrupulously and unprofessionally, to the detriment of insurance service users. In short, the issue of trust is cause-and-effect related to the principle of conscientiousness and honesty, the principle of legality and good business practices in the performance of insurance activities. In this paper, the author considers various aspects of reputational risk control and management, both from the perspective of the responsibility of the insurance company’s management, and from the perspective of the responsibility of other entities in the insurance industry, as well as employees at all levels of the organizational structure (Risk Owners) as owners of individual risks. The role and importance of management and all employees in creating and maintaining trust in the insurance industry and, in this regard, developing and improving relationships with service users as key stakeholders, is emphasized.