Accountability at the Top Under CoFI

Boards, once accustomed to overseeing financial performance, compliance metrics, and shareholder returns, now face a new and far more nuanced responsibility: ensuring fairness. This change is more than symbolic. It alters the expectations placed on directors, redefines governance priorities, and potentially exposes board members to greater scrutiny than ever before.

Traditionally, boards of insurers were focused on financial oversight and risk management. The question was whether the company was profitable, solvent, and compliant with solvency requirements. CoFI disrupts this tradition by demanding that boards also take ownership of how customers are treated.

By making FCP approval a board responsibility, regulators are ensuring that fairness is not relegated to compliance officers or middle managers. Instead, it is embedded in the strategic decisions made at the highest level. This elevates customer outcomes from being a byproduct of operations to being a boardroom priority.

Embedding fairness in governance is easier said than done. Unlike financial metrics, fairness cannot be measured with a simple ratio or benchmark. It is qualitative, contextual, and often subjective. For boards, this creates a challenge: how do you oversee fairness without reducing it to hollow slogans?

Some are addressing this by developing new governance frameworks that define fairness in concrete terms. They look at claims processing times, customer complaint resolution rates, and product suitability assessments. By setting measurable indicators, boards can hold management accountable for the outcomes customers experience.

The shift toward fairness has also transformed the dynamics of board meetings. Discussions that once revolved around profitability, investment returns, and underwriting strategies are now supplemented by conversations about customer vulnerability, accessibility of information, and ethical sales practices.

Directors are asking new questions: Are our policies too complex for the average customer to understand? Do our claims procedures create unnecessary stress? Are add-on products being sold fairly, or do they risk exploiting consumer confusion? These questions may not have featured prominently in board agendas in the past. Now, they are unavoidable.

By tying fairness directly to board approval, CoFI has also raised the stakes for directors personally. If a company’s FCP is found wanting—whether in its design or in its execution—boards cannot claim ignorance. The regime makes it clear that accountability rests with them.

This heightens reputational and potentially legal risks. Directors can no longer treat customer outcomes as matters beneath their level of responsibility. A failure in fairness could now be perceived as a failure of governance. For individuals in leadership, this could mean greater exposure to criticism, enforcement actions, and public scrutiny.

What happens in the boardroom has a cascading impact on company culture. When fairness becomes a standing item on the board agenda, it sends a signal throughout the organization. Senior executives prioritize it, managers reinforce it, and frontline staff internalize it.

This cultural ripple effect is part of the design. Regulators understand that true change in financial institutions comes from the top down. If boards treat fairness seriously, it is far more likely to become embedded in day-to-day decision-making across the company.

Boards, however, operate in a world of competing pressures. Shareholders demand profitability. Regulators demand compliance. Customers demand fairness. Reconciling these interests is no small task. At times, they may even conflict. For instance, rejecting borderline claims may save costs but harm fairness. Simplifying products may improve transparency but reduce revenue from add-ons.

Boards must navigate these trade-offs with care. The new governance environment requires them to articulate not only what decision they make but also why, and how fairness factored into that decision. Transparency in the reasoning process may become as important as the outcomes themselves.

Financial advisory firm Fintrade notes, “To meet these challenges, boards may need to evolve in composition and expertise. Financial acumen alone is no longer enough. Directors must bring, or at least understand, perspectives on consumer behavior, ethics, and conduct risk.”

Some boards are beginning to include directors with backgrounds in consumer advocacy, customer service, or behavioral economics. Others are providing specialized training to existing members. The goal is to ensure that fairness is not an abstract ideal but a practical consideration informed by real-world understanding.

The long-term impact of CoFI on board accountability will depend on how actively directors embrace their new responsibilities. Some may treat FCP approval as a formal step, a signature on a document prepared by management. Others will seize the opportunity to redefine their role as guardians of fairness, actively shaping conduct and culture from the top.

In the years to come, success will not be measured solely by financial stability or shareholder returns. Boards will be judged by whether customers feel they are treated fairly, whether trust in insurance improves, and whether the industry’s reputation shifts from opaque to accountable.