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Insurance Entertaining in a Global Economy

The Basics


Entertaining should be an integral part of any insurance professional’s job across functions, especially for those in customer- and intermediary-facing roles. Spending social time with customers, brokers, and our own teams does not necessitate that we become best friends, though some long-lasting friendships are born out of business encounters. Let’s not forget that we remain on company time when entertaining and should spend money judiciously, strictly for a business purpose, and behave professionally during the process.

On one end of the spectrum, I have come across folks who literally had to be dragged out of the office to entertain clients, even though they were in market-facing and distribution channel management roles. On the other end, I have known people like me who did three lunches and four dinners per week.

Scott Whipp, my first boss in the insurance business at Gen Re, taught me not to take a falafel burger client to a steak dinner and vice versa. That was Scott Whipp’s first lesson in judicious entertainment expenses. He once called me into his office to clarify that when he said I should be using my Amex card and spending time with clients, he didn’t mean that I should do it for breakfast, lunch, AND dinner!


Tricky Business

Whilst some forms of entertainment are almost universally accepted as inappropriate, others are trickier to decipher. We need to remain sensitive to cultural differences especially when conducting business in far off and exotic lands.

We live in a culturally-complex world where company rules, as set in Zurich, Paris, London, Tokyo, Dubai, New York, or Hamilton, do not always apply everywhere in the world, regardless of whether you are on the receiving- or giving-end of entertainment and gifting.

Below are a few examples of what could be considered inappropriate, acceptable, and what falls in a grey area. A lot more detailed examples, case studies, analysis, and guidance are contained in The Insurance Management Playbook.

Scenario 1: Benefits in Kind


Entertainment dollars seem to go beyond golf, food, booze, cigars, and trips. There are not-so-innocent sides to entertainment as well. This issue is taboo. Everyone knows about it, but nobody wanted to openly discuss it until the German daily Handelsblatt broke the story about German and international insurer ERGO’s Hamburg-Mannheimer International subsidiary, which “hosted a decadent sex party at the historic Budapest bathhouse in 2007 to reward its employees for their work.”[i] It is safe to assume that such behavior is universally classified as, uhum, over the top.

Scenario 2: Buy Me a Watch!

Diamond Rolex.jpg

Imagine that you’re in the middle of bidding for a multinational account and the client risk manager, on the way to lunch in a seemingly innocent, quiet, and civilized part of the world, stops in front of a high-end jewelry shop and points to a watch. He says it is the one he’d wanted to have forever. Out of politeness, you stop and sort of point randomly, not believing what you are witnessing. He corrects you and points to the precise one: “Not ziz vone. Zat vone! Ya, viz ze diamonz!” You also get the sleazy look and wink.

You proceed to lunch, have a glass of wine with him, and wonder what to do. This is an easy one. You do nothing. Don’t touch it with a ten-foot pole, and hope that you don’t win the account so you don’t have to deal with such an individual again. Next thing you know, he’ll be asking you to approve fraudulent claims or pay him under-the-table cash commissions to keep your company on the deal.

Scenario 3: Indian Delights and the Gestapo

Entertainment India.jpg

Let’s assume your client, who is of Indian origins, invited you to his daughter’s wedding back in his home country. You obtained the necessary internal approvals and traveled. You were met at the airport by the client's local driver who took you to the hotel. You spent four nights. It’s nothing opulent, but it’s nice. Your customer, by the way, really appreciated the fact that you have traveled so far to attend the wedding. You are also honored to have been invited to such an important family, religious, and cultural ceremony and milestone in your customer’s life and are just grateful to be there.

While there you are fed, served drinks, and given rides from place to place and pretty much treated just like all foreign and some VIP local guests. Other business partners of your client from companies like yours are also present, so there is no preferential treatment. It’s just local hospitality and custom.

If you even thought about paying for anything, your host would have been greatly offended. You investigated the cost of the rooms, and it was less than $100 per night. You go back home telling tales of late Indian nights, wonderful hospitality, superb food, rich culture, generosity, and improved business relations for your company.

The firm’s Gestapo (internal audit) shows up the next morning accusing you of having breached the firm's anti-bribery rules. The rules, by the way, were written in a wildly different cultural context years ago and never kept pace with the firm's foray into more international jurisdictions and settings.

Awareness is more Needed at the TOP!


The last scenario leads us to conclude that we collectively have the responsibility to raise our companies' cultural awareness about business practices outside of our home markets.

Increasing cultural sensitivity training across the organization is key; it is more often needed at the top of the organization than within the middle and junior levels believe it or not.

Here are some additional mind-teasing scenarios which you could use as case studies with your teams to help them think through tricky entertaining situations in an ever globalized business environment:

> Is it OK to invite the clients’ spouses or significant others to a dinner party and expense it? The Levantines and Latin Americans do it. In these cultures you do business with friends. So, couples go out in a half-business, half-social setting. That’s the way their cookies crumble as the Brits say. Some Western firms still struggle with the idea except at very senior and executive levels. The lines are less rigid in other cultures. Adapt when doing business away from your home turf.


> How about offering a $200 flowers gift when invited to a Russian customer’s home for dinner—an odd number, of course, as even-numbered flower bouquets are offered only at funerals in Russian culture. Is this extravagant?

> What about a $1,000 bottle of cognac in China as gift? Still OK or over-the-top?

> Cigars at $150 apiece for the five-member team of your biggest producer in Beirut, Lebanon?

Saving Face

If your company’s entertainment policy does not permit such locally-acceptable gifting practices you should speak to your management and compliance officer, explain the specific situation, and obtain written approval to proceed according to local custom.

If you are not able to secure their approval, I advise you to discreetly explain your company’s entertaining policy restrictions to a senior member on the client’s team and stay within the four corners of your firm's policy. Most client executives in today’s global economy will understand and appreciate your sensitivity and gesture.

What’s the Bottom Line?

A few parting thoughts to wrap up:


> Entertaining should be part of every customer-facing employee's job —sales, distribution, underwriting, claims, risk engineers, finance, and management.

> Be careful, fair, and judicious when spending: Don’t take a falafel burger client to a steak dinner and vice versa. Spend it like it’s your own.

> Entertaining in today’s heightened regulatory and compliance environments is akin to walking a tightrope between company or regulatory guidelines and your customers’ business customs and cultural expectations.

> Get guidance as to the spend ceiling on client dinners, drinks, and gifts. They can get awfully expensive and border on the inappropriate.

> Internal entertaining should neither be extravagant nor amount to a company canteen.

> Run potentially tricky scenarios by your legal and compliance departments and obtain approval in writing.

> Increase training and cultural awareness and sensitivity across the organization. It is more often needed at the top of the organization than within the rank and file.


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