Pat Gallagher reveals what it takes to run an ethical insurance company

Pat Gallagher reveals what it takes to run an ethical insurance company | Insurance Business

Pat Gallagher reveals what it takes to run an ethical insurance company

Global insurance brokerage and risk management firm, Gallagher, was recently recognized as one of the World’s Most Ethical Companies in 2019. The brokerage has been honored for the eighth year running by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices. In 2019, Gallagher joined 127 other honorees spanning 21 countries and 50 industries.

“Gallagher has been committed to maintaining the highest standards of moral and ethical behavior since our founding in 1927, and we’re truly honored to again be recognized as one of the World's Most Ethical Companies in 2019,” said J. Patrick Gallagher, Jr., chairman, president and CEO. “This distinction is a testament to our global team, united by the single purpose of helping people, businesses and communities navigate risk so they can face their future with confidence.”

The World’s Most Ethical Companies assessment is based upon the Ethisphere Institute’s Ethics Quotient (EQ) framework, which assesses a company’s performance in five key areas: ethics and compliance program (35%), culture of ethics (20%), corporate citizenship and responsibility (20%), governance (15%), and leadership and reputation (10%).

Gallagher was first recognized by the Ethisphere Institute in 2012, after what the CEO described as “a herculean effort” on the extensive application process. He told Insurance Business he was not surprised the brokerage made the list because “a culture of ethics is what we’ve been about for the past 90 years”. It’s one of the foundations Arthur J. Gallagher built the company upon in 1927, and it has remained at the company’s core ever since.

“Compliance and ethics are two separate things. Compliance is what you must do – that’s table stakes. Ethics is all about what you should do,” said Gallagher. “When I think about what defines an ethical company, to me it’s all about integrity and trust. As a leader, for example, folks are only going to follow you if they trust you. In order to be trusted, you need to behave with integrity and ethics, you need to tell the truth, and you need to be open with people.     

“Running an insurance company is about more than just making money. Of course, making money is imperative from a business perspective, but the fact is, our job in the insurance industry is to give our clients the confidence to face their futures. With the support of the insurance industry, companies are able to grow their businesses and strive for new goals, while also spending time with their families – and I’m proud to be a part of that. Getting this award for the eighth year running really certifies that Gallagher is about more than just making money.”

Maintaining a culture of ethics is key, according to Gallagher. It resonates with prospective and current employees – and it’s extremely important in the brokerage’s merger and acquisition (M&A) strategy. While Gallagher is open about targeting a revenue and earnings stream, the firm also celebrates buying good brain power and teams of a strong cultural fit.

“When it comes to the World’s Most Ethical Companies list – boy does that play well with prospective independent agent partners,” Gallagher noted. “When they’re looking at us and trying to decide whether or not they want to join us, this outside certification that confirms what we say about our culture is true, helps a lot in the M&A process.”

All companies that take part in the Ethisphere Institute World’s Most Ethical Companies assessment process receive scores that provide them with valuable insights into how they stack up against leading organizations. Gallagher has an internal project team that analyzes the brokerage’s scoring and sets targets for improvement.

“Five-years-ago, we didn’t have a global chief compliance officer. We responded to feedback and we hired a fantastic woman for the role, who really understands global insurance best practices,” Gallagher commented. “She’s travelled all over our North American operations, all over the UK, Canada, New Zealand, Australia, and she can attest that she’s been in those places and has met with their compliance officers. We believe now that we’re a top-notch company when it comes to compliance.

“Having been in this business for 45 years, I can make a really strong case for why compliance and why the compliance culture that’s developing around the world is a really good thing. Good behavior really matters, and that’s what our people are preaching. I think one of the most important things when it comes to compliance is making sure that in each location, in each geography, we’re really following the rules. Then we have to question whether the rules are strong enough in each jurisdiction and whether we want to up them to a higher level. That’s why we’ve introduced a global chief compliance officer, and that’s why the Ethisphere Institute has recognized our compliance program.”