News headlines everywhere have trumpeted the consequences of compliance failures in various industries. It is thus not surprising that in an industry like insurance, which is based almost completely on trust, CEOs and boards as well as regulators are placing ever greater importance and reliance on the compliance function.

What may be a surprise, however, is that these demands may be more opportunity than challenge for insurers, with great compliance having the potential to be a significant asset, not a burden.

New research from Deloitte shows that investment in the compliance function is associated with increased revenue and profit as well as lowered danger of reputational and other risks. (See Deloitte’s 2016 Insurance Ethics and Compliance Survey.)

We surveyed executives from 15 of the largest U.S. life and property/casualty insurers. Companies were separated into two compliance maturity categories—higher and lower maturity—based on a self-rating of key compliance and spending parameters. Here’s what we found:

• Tone at the top matters. The first ingredient in a world-class compliance and ethics program is the attitude that senior management sets, known as “tone at the top.” At higher-maturity companies, 89 percent of respondents felt that their company is very effective in setting a tone at the top regarding ethical behavior and compliance. Only half of the respondents from lower-maturity companies held that view.

• Boards are engaged. Reporting of compliance issues to a committee of the board of directors at least every six months was found at every company we surveyed. But two-thirds of the high-maturity companies reported they updated the full board at least once a year, while only one-third of low-maturity companies did so.

• Compliance maturity may be an indicator of company performance.Companies with higher-maturity compliance functions showed stronger financial or operational performance than low-maturity companies. Over the five-year period from 2011-2015, P/C companies with higher-maturity compliance functions showed a growth rate in direct premiums written of 6.5 percent compared to 6.0 percent for those companies with lower-maturity functions.

Higher-maturity life companies had an 8.1 percent average growth rate in total premiums in that period compared to a 2.5 percent average growth rate for companies with lower-maturity compliance functions. Bottom-line performance was also evidenced in higher-maturity companies—in P/C companies, the return was 240 basis points greater; in life companies, the improved return was 140 basis points.

But how does a company move from “good” to “great” compliance? Our research found that higher-maturity companies excel in four areas.

• Training.At a minimum, annual training for all employees helps remind employees of the importance of ethics. In our survey, all insurers with high-maturity compliance functions performed annual training.

• Communication. Communication around the code of conduct should be regular and disseminated throughout the organization. Here too, all insurers with high-maturity compliance functions provided regular updates and communications around that code of conduct to reinforce the message from senior leadership to all employees.

• Data gathering. As in other facets of the organization, feedback, measurements and assessments of the effectiveness of the compliance effort are necessary in order to optimize that effectiveness. Two-thirds of the companies with high-maturity compliance functions collected feedback through regular employee surveys.

• Incentives.Companies with higher-maturity compliance functions also tend to put a greater emphasis on including consideration of ethical behavior in employee evaluation and compensation matters. In our survey, 44 percent of these companies said they did so formally. In additional in-depth interviews conducted as part of our research, some chief compliance officers noted that while there was no formal process, ethical behavior was a basic expectation for all employees and thus was implicitly incorporated into employee evaluations and compensation decisions.

This focus on incentives echoes recent comments by William C. Dudley, president and CEO of the Federal Reserve Bank of New York. Speaking at a conference of financial services leaders in October (“Reforming Culture and Behavior in the Financial Services Industry: Expanding the Dialogue”), he noted that the industry’s culture would not change through appeals to goodness but rather from “incentives and clear accountability.”

In the future, we believe more companies will take steps to transform their compliance function. They will seek to move compliance from a transactional, process-oriented function focused on cleaning up failures to a forward-thinking, analytics-based function serving as a trusted business adviser whose aim is helping to achieve business goals. Those that do so may reap tangible financial benefits.