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The compliance function powers performance

An asset for insurers

​In the face of enhanced regulatory scrutiny, there is light ahead for insurers. Data from the 2016 Deloitte insurance ethics and compliance survey show a relationship between a mature compliance function and financial performance. Learn how to transform the insurance compliance function to lower risk, improve company culture, and empower growth.

The compliance function in insurance companies

The compliance function is no longer just an overhead cost driven by regulatory demand—as those more distant from its evolution may assume. According to respondents from the 2016 Deloitte insurance ethics and compliance survey, it can be an asset. To transform and elevate compliance programs, compliance personnel and other members of the C-suite should address the increasing requirements and differing skill sets needed to:

  • React to and anticipate changes in the business, consumer, and political environments
  • Enable insurers to minimize the reputational and operational risks that can follow compliance failures
  • Position the company for sustainable growth

For companies seeking to move their compliance functions from "good" to "great," download our report for guideposts that signify a high maturity compliance function. For those that follow these guideposts, quantitative and qualitative rewards may await.

The correlation between compliance investment and company performance

Based on the responses to our survey, we determined that many of the respondent companies had chosen to systematically and continuously invest in their compliance and ethics programs. This was not an ad hoc investment or series of investments in reaction to any particular event, but part of a corporate plan to increase the functions and capabilities of compliance and ethics programs. In our view, the resulting qualitative increase in the abilities and maturity level of the compliance function can best be described as a movement from “good” to “great.” Great compliance and ethics programs have certain characteristics in common. As our colleagues Nicole Sandford and Maureen Mohlenkamp noted in their research, the first ingredient in a world class compliance and ethics program is the attitude that senior management sets, known as “tone at the top.”

The compliance function performance: Tone at the top

Research shows that the attitude set by senior management, usually called “tone at the top,” is a central pillar of a world class ethics and compliance program.

Survey participants cited the active and visible leadership of and genuine support from the CEO and senior management as a driving reason for organization members at all levels embracing compliance as an essential responsibility.

Though such leadership is a necessary prerequisite, it is not necessarily enough. Our survey reveals how CCOs feel about the sufficiency of the resources they receive and the influence they have over organizational decisions.

How effectively those resources are deployed may also be a concern. Our survey examines differences among professionals at companies at varying compliance maturity levels in their perception of “tone at the top,” as well as differences between CCOs charged with creating the ethics and compliance programs and the line executives charged with integrating these programs into everyday decisions.

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Tone at the top: Our survey results

The compliance and ethics tone from the top is highly correlated with where a company is on the maturity continuum of effective compliance and ethics programs—50 percent of respondents from lower maturity companies feel that their company is very effective in setting a tone at the top regarding ethical behavior and compliance compared to 89 percent of respondents from higher maturity companies.

Graph source: Deloitte insurance ethics and compliance survey, 2016

To find out more, download Compliance to power performance.