Ethics for the Insurance Professional

Presented byChris McLeod

CPCU,CIC,ARM,AAI,AIM,AIS,API,AU,CRIS,CPIW,CISRPresident Smart Choice Agents Programt

High Point, NC

Statistics to Think About1 in 2 Americans genuinely believe you get

ahead by politics and cheating, not by hard work

1 in 6 Americans regulary drinks or uses drugs on the job

Statistics1 in 4 Americans expect to compromise their

personal beliefs in order to get ahead in their current job

American workers frankly admit they spend more than 20% (8 hours a week) of their time at work totally goofing off

Statistics

Americans feel the #1 cause of business decline is low executive ethics!

DefinitionsEthic

A system or moral standards or values A particular moral standard or value

DefinitionsEthics –

The study of standards of conduct and moral judgment; moral philosophy

They system or code of morals or a particular person. . . Group or profession

DefinitionsEthical

Conforming to moral standards; conforming to standards of conduct of a given profession or group

My ViewJUST DO WHAT IS RIGHT!!!!!!

DefinitionsMoral

Honest

Integrity

Legal

Why be Ethical?Social ResponsibilityContractual ResponsibilitiesAvoid Public CriticismAvoid Government RegulationMinimize Errors or Omissions

Core Principals• Is it honest, truthful, sincere, frank and candid?

• Is there integrity? Am I using sound moral principles?

• Is it fair to all?

• Is there due consideration for the rights of others?

• Do I accept responsibility for the consequences of my actions and decisions?

Core PrinciplesIs there diligence in the pursuit of

excellence?

Most importantly, is it altruistic?

Why do people Act Unethically?Inadequate training

Poor Reasoning

Self Deception

Self Protection

Business Ethics and Public StakeholdersInsurance Agent and Insurance Company

Management Relationships

Business Ethics and Public StakeholdersInsurance Company Relationships

Duties owed by the Agent to the Insurance Company:

What information do we need to transmit to the underwriter when applying for new coverage?

What are “Material Underwriting Facts”?

What should an agent do if there is a material change in the operation of an insured mid-term?

Duties owed by the Agent to the CompanyDo you answer “unasked” questions form the

underwriter?

Do you reveal information to the insurance company learned “after the fact”?

What should an agent tell one insurance company about another insurance company?

Duties owed by the Insurance Company to the Agent• Should the insurance company honor

mistakes they make?

• Should the insurance company tell the agent of changes in claims reserves?

• Should an insurance company marketing person or underwriter tell another agent about an insured they quoted but the original agent did not deliver?

Duties owed by the Company to the insuredWhat information should the insurance

company divulge to the agent about an insured.

Agent’s fiduciary responsibility to their Insurance CompanyDoes an Agent have a responsibility to hold

their represented insurance companies in high esteem and not reveal to others their methods of doing business?

Does an Agent have a responsibility to deliver an insurance company’s quote to a prospective client?

Agent’s fiduciary responsibilityShould an agent give one insurance

company’s quote to another insurance company also represented by the agency?

Duties owed by the Agent to their CustomerWhat Duty is owed?

Is the duty to offer the lowest premium?

Is the duty to place the business with the most financially sound insurance company?

Does the Agent have a duty to identify ALL possible loss exposures to a customer, or is the duty to only insure what the client requests?

Duties owed by the Agent to the CustomerShould the Agent request renewal quotes

from all represented insurance companies?

What responsibility does the Agent have to update coverage at renewal?

What Information can you share about a customer?

Miscellaneous DutiesDuties owed to the Public?

Competitive Advantage vs Ethical standards

Soliciting New Accounts

Legal vs EthicalUnfair Trade Practices

Misrepresenting the terms of a policyMaking untrue statementsMaking false statements regarding the

financial condition of an insurerFiling false statementsUnfair discriminationIntentionally establishing unfair premiums

Ethical Decision MakingIs it an ethical question or legal issueGather all informationWho are the stakeholders and what are their

rights?What are the alternativesReach a decisionMonitor the decision

ScenariosWhat are the ethical issues?What should the Agent do?

With the CustomerWith the Insurance CompanyWith the current Agency

Thank you!On behalf of the Independent Insurance

Agents and Brokers of South Carolina and Smart Choice we thank you for attending today’s session.

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