The Concept of Failure in Insurance | Pessin Katz Law, PA

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One of my favorite motivational quotes is from Winston Churchill, the great British Prime Minister who ruled England during WWII. As he noted, “success is not final, failure is not fatal: it is the courage to continue that counts”. From my perspective, these are important words for the modern insurance industry.

While none of us like to fail, failure creates the need for insurance products, especially property and casualty insurance products. In the 1700s, the failure of maritime expeditions resulting in loss of cargo prompted investors to seek insurance; thus, Lloyds of London has grown to meet the need for potential failures in shipping. Today, failures in computer systems have created cyber risks; the risk of system failure created the need for cyber insurance. Risk and failure drive the development of new insurance products.

On the claims side, human or institutional failures create claims. A homeowner forgets to unplug the lights on the Christmas tree (or even water the tree) and a fire breaks out. A person driving a car is distracted and an accident occurs. A busy business neglects to take the time to put the necessary processes in place and property is damaged and people are injured. Failure is what usually causes complaints.

Even on the business side of insurance, failure is a pervasive specter. An agency loses a provident premium when one of its clients has a large debt. A boss pushes an employee too hard, causing them to quit in order to have a better work-life balance. An insurance professional leaves out an important detail in a report simply because of oversight and life stress. All common failures that have a business impact.

So, with assurance being built on the concept of failure and failures being so common in business, why do we avoid discussing failure except between our quiet close friends and our therapists? Is it just because most people don’t want to wear the loser label? Are we afraid that being labeled as having failed at one thing in the past will label us as a potential loser for future endeavors? Or are we so afraid of failure that we stop taking risks? Whatever the answer, we as an industry must understand that Churchill’s concept of failure is not fatal.

First of all, we insurance leaders must embrace the concept of failure. It would be refreshing for insurance companies to embrace the concept that growth can come from a lack of perfection. It would be instructive for a CEO to discuss mistakes made and lessons learned. Knowing that mistakes can be costly, it will likely be difficult to embrace the concept of failure. So how do you inspire a culture of failure that is not seen as fatal? The first step is for business leaders to accept and communicate that mistakes, at least most mistakes, can create an opportunity for improvement. (And a little hint, employees love to hear that the boss is someone who has made mistakes in the past.)

Second, when a “failure” occurs, there must be an honest assessment of what happened and how, in the future, the situation can be improved. Sometimes this requires a detailed 360-degree autopsy. Too often failure is blamed on one person, when in reality the blame must be shared. For example, the failure I had this week was not being a good coach for a new hire. I was too busy to explain the assignment in detail or to discuss what I particularly wanted in a work product. As a result, the product given to me was almost unusable, requiring extra effort and time. In the autopsy I had with this employee, we discussed where the mission went off the rails, focusing on what we both could do better in the future. Exchanging ideas on what could be better done by the two of us in the future, rather than pointing out all the employee’s flaws, allowed us to have a candid and achievable plan for the future.

Finally, I adhere more and more to the concept of going slow in order to go fast. Where I go too fast, I make mistakes. We have all seen the sign on the administrative assistants desk that says, “Do you want my job to be good or fast?” While I actually want it to be both, I have to come to terms with the idea that it takes time to do quality, thorough work. Especially when it is necessary to be close to perfection, we must allow for deadlines. If I do not allow such tolerance, I should also understand that errors should not be considered fatal errors.

Of course, there are many ways to prevent failure through education, training, experience and mentorship from insurance professionals. Unfortunately, not all failures can be avoided. So where failure occurs, we have to understand, what Churchill said so many years ago, that it is “the courage to carry on that counts.” Here is the hope for continued change in our insurance industry when setbacks are faced.

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