Page 48 - The Insurance Times May 2025

Reputation Risks

Reputation Risks in the Digital Era: A Growing

Concern for the Insurance Industry

Introduction Reputation Risk in the Insurance Indus-
In today's hyper-connected world, reputation is one of the try
most valuable yet vulnerable assets for any organization.
The insurance industry is inherently built on trust. Policyhold-
With social media, 24/7 news cycles, and instant consumer
ers entrust insurers with their financial security during times
feedback, a single incident-whether a data breach, regula-
of need-be it health emergencies, accidents, or natural di-
tory violation, or misjudged public statement-can trigger a
sasters. Any perception that an insurer is evasive, unrespon-
public relations crisis that threatens a company's credibility
sive, or exploitative can quickly erode this trust.
and financial stability. These "reputation risks" have now
emerged as one of the top concerns for business leaders
The highly regulated nature of the industry further increases
across sectors. In the insurance industry, where trust and
scrutiny. Errors in policy communication, failure to meet
reliability are core pillars, the impact of a reputation crisis
solvency norms, or ambiguous claims processes can not only
can be particularly severe.
invite legal penalties but also tarnish public perception.
From denied claims going viral to policy mis-selling scandals, Case Study: Leading Private General In-
the reputation of insurance companies is under constant
scrutiny. This article explores the evolving nature of reputa- surance Controversy

tion risks, how the insurance industry is particularly exposed, In early 2023, one of India's leading private insurers, faced
and what strategies insurers can adopt to safeguard their a public relations storm when a widely shared social media
brand image. post accused the company of denying a travel insurance
claim on dubious grounds. A customer, who had purchased
Understanding Reputation Risk a travel insurance policy covering medical emergencies, was
hospitalized abroad due to an unexpected illness. When the
Reputation risk refers to the potential loss an organization
faces when its reputation is damaged due to internal or customer's family approached Insurance Company for reim-
external events. These risks can arise from various sources: bursement, the claim was reportedly delayed for weeks with
vague justifications. (Actual company name not disclosed)
Customer dissatisfaction or mishandling of claims
Regulatory breaches or unethical business practices
The incident gained traction on platforms like Twitter and
Cyber incidents or data leaks LinkedIn, drawing criticism from influencers and industry
Employee misconduct observers. Hashtags such as #InsuranceScam and
Negative media coverage or social media backlash #insurancecompany trended for days, attracting negative
media coverage. Though the company eventually settled the
Unlike financial risks, reputation risks are less predictable claim and issued an apology, the damage to its reputation
and harder to quantify, but their impact can be devastating had already been done.
and long-lasting. According to a Deloitte survey, over 85%
of executives believe reputation risk is more important than The controversy led to:
other strategic risks. A temporary dip in stock price

44 May 2025 The Insurance Times