ETHICS: THREE RULES FOR AVOIDING TROUBLE

Regence

Rule 1. Know the Law

1. Doing Business2. The Requirements of a Licensed

Profession3. Providing Competent Advice on

Regulated Products

Finding the Law

Doing Business corporations.utah.gov sba.gov

Licensed Profession www.insurance.utah.gov/legalresources Title 31A, Chapter 23a—Insurance Marketing R590-154 Unfair Marketing Practices Rule R590-192 Unfair Accident and Health Income

Replacement Claims Settlement Practices Rule R590-207 Health Agent Commissions for Small Groups Bulletins Utah Supreme Court Case Law: Unlicensed can’t collect?

Finding the Law

Providing Competent Advice on Regulated Products Carriers & Plan Documents www.insurance.utah.gov Chapters 8, 22, and 30 of the Insurance

Code http://cciio.cms.gov

Finding the Law

Tips Figure out how subsections work together Make sure you have confidence in the

sources you use Don’t be afraid to say what you don’t know

or that you need to look into the issue further to be able to give an answer

Following the Law

Trust Account: Not reconciling, failure to have a trust account, misuse of the trust account

Licensing: Agency not licensed-needs to be the same name as on marketing material, appointed agents not the same as UID's records, failure to update contact information within 30 days, failure to disclose administrative action or criminal charges to the UID within 30 days.  

Forgery: Producers signing for the applicant-policyholder.  Failure to disclose important information in relation to a

policy, example - hidden costs, penalties for early withdrawal, etc.

Selling a product that is unsuitable for the customer Unfair inducement-offering something of value (over $3,

soon to be $25) with strings attached   Cross-border sales Unsuitable annuities for the elderly (i.e., having the elderly in

their 80's do a reverse mortgage to purchase an annuity) 

Following the Law   Misrepresenting to the Insurer on the application.  Not doing a 1035 Exchange to replace an annuity. Having the husband (licensed revoked) have his wife

sign the applications, when the husband actually did the solicitation and made the sale. 

Unauthorized insurance  Using unlicensed producers or CSRs  Delay of recorded documents,  Fraudulent insurance Use of unlicensed TPA's Entities selling without a Certificate of Authority  Operating un-licensed agencies Failure to report criminal/administrative background

Following the Law

Ignorance Fraud Mismanagement Incompetence Failing to Put Client’s Interests First

Following the Law

General Rules for HB 333 Benefit/Service must be specified or directly

related to insurance contract Advice is generally permitted;

Administration is not except for COBRA Benefit/Service can only be given for a

purchased insurance product Social courtesy is permitted if not quid pro

quo with $25 safe harbor

Written Disclosure for Noncommission Fee

    31A-23-501 (2) A licensee may receive from an insured or from a person purchasing an insurance policy, noncommission compensation if the noncommission compensation is stated on a separate, written disclosure.     (a) The disclosure required by this Subsection (2) shall:     (i) include the signature of the insured or prospective insured acknowledging the noncommission compensation;     (ii) clearly specify the amount or extent of the noncommission compensation; and     (iii) be provided to the insured or prospective insured before the performance of the service.     (b) Noncommission compensation shall be:      (i) limited to actual or reasonable expenses incurred for services; and     (ii) uniformly applied to all insureds or prospective insureds in a class or classes of business or for a specific service or services.     (c) A copy of the signed disclosure required by this Subsection (2) must be maintained by any licensee who collects or receives the noncommission compensation or any portion of the noncommission compensation.     (d) All accounting records relating to noncommission compensation shall be maintained by the person described in Subsection (2)(c) in a manner that facilitates an audit.

Staying Abreast of Law

Amends Qualified Plan for State Contractors $1000/$3000 Deductible 60% Employer Contribution for HDHP

Aligns NetCare with Federal Reform Responsibility for Conversion Notice has Shifted to Insurers Limits on Available Abortion Coverage

Life, Health, Fatal Defect, Rape or Incest

Grace Periods Individual

Not in force during grace Terminated as of last day paid in full

Group 30 days In force during grace Terminated as of last day of grace

Small Group Rating Changes

As of July 1 Gender can be factored in

Age band ratio will increase 6 to 1

Family ratio can be as high as 6 to 1

As of September 1, Five rating tiers will be required Employee only

Employee plus spouse

Employee plus one dependant, other than a spouse

Employee plus more than one dependant, other than a spouse

A Family, consisting of an employee plus spouse, and a dependant or dependants

Exchange Changes

Exchange will only be available to small groups Risk Adjustor will be limited to Exchange NetCare plan will be available on Exchange

Federal Reform

Postponement Of Highly Compensated Employee Rules Until Plan Year After Regulations Adopted Same Benefits Eligibility & Participation Reason to Grandfather

Litigation Over Mandate 2012 Election State Income Tax Consequences Of Under 26

Automatically Follow Federal Law—Like Utah Others Don’t Valuation of Coverage

COBRA or Incremental Mandatory to Offer, Optional to Take

Rule 2. Don’t Settle for a Bad Decision

No one wakes up in the morning and decides to rob a bank…

One thing leads to another… Close Friend

Incapacitated Client Access to finances Financial Trouble Temporary Loan Lavish Lifestyle Problem Came to Light

Some things lead to even more…

Prosecuted a guy Created a Ponzi Scheme Held himself out in the Community Took all $450K of working class couple’s

retirement Said he could only get money back if no jail

Avoiding the Marginal Cost Mistake

How Will You Measure Your Life Clayton Christensen

Marginal Cost Doctrine in Business Marginal Costs and Revenues for New Investment

In this extenuating circumstance, just this once, it is OK.

Life is a stream of extenuating circumstances Holding to your principles 100% of time is

easier than 98% of the time.

A series of exceptions…

My Friend Lack of financial controls A willingness to go beyond professional

scope Justification based on immediate need Personal commitment to “pay back” One thing led to another

The Defendant I get what I want from whoever I want No one can hold me accountable

Playing Life Forward…

There are exceptions and then there are legitimate choices between reasonably good, competing options

Remains of the Day Butler Post World War II His Choices

Family Man Replay decision to go to Europe to advance

career

Defining Moments

Joseph Badarocco Right v. Right Decisions

Reveal our values Test our resolve Shapes our future

Mastering Moments What matters most What should be done What is the optimum outcome

Organizational-level moments

Strategic sophistication of Machiavelli Strong and prosperous organization Understand competitive environment Playing the role of fox or lion

Balancing and moderating ethos of Aristotle

Aristotle

It is the nature of moral qualities that they are destroyed by deficiency and excess, just as we can see in the case of health and strength. For both excessive and insufficient exercise destroy one’s strength and both eating and drinking too much or too little destroy health, whereas the right quantity produces, increases, and preserves it…

Aristotle

So it is the same with temperance, courage, and the other virtues. The man who shuns and fears everything and stands up to nothing becomes a coward, the man who is afraid of nothing at all, but marches up to every danger, becomes foolhardy.

Aiming High…

Avoiding Exceptions Shaping Your Life Through Decisions

Consistent with Your Values Not Settling for Second Best Outcomes

Abraham Lincoln’s Conderum Team of Rivals, Doris Goodman Divided Country Divided Union

War Slavery

Emancipation Proclamation

Moment of Sheer Brilliance Limited to Slaves in the South Focused on those fighting against Union Became the beginning to the end of slavery

Integrative Thinking

The Opposable Mind Roger Martin

The ability to create solutions beyond obvious and unsatisfying choices Containment over war or acquiescence Distributing software on internet over fee or

free A willingness to embrace complexity and

reject suboptimum outcomes

Good Faith

The Essence of “Getting to Yes” Roger Fisher and William Ury

Separate People from the Problem Focus on Interests Not Positions Invent Options for Mutual Gain Insist on Using Objective Criteria

Rule 2. Don’t Settle for a Bad Decision

Bad decisions can be slippery slopes that become the rule in your life rather than the

exception fundamentally reshape your values and

future decisions Be willing to

Wrestle with complexities to find optimum solutions

Operate in good faith

Not just about Staying Out of Trouble…

Problem Solving is a Key Professional Skill Connection Point Keep Folks Happy Professional Knowledge & Judgment

Rule 3. Assume a Transparent World

HB 477 Process Transparency

Living in a Digital World Volume Duration Re-transmission

Livelihood

The $64 Question

Is what I’m saying, doing, or writing something that I’d be OK with if it was permanently captured and shared with: My family My current and potential clients My co-workers Competitors The media The government

The Three Rules for Avoiding Trouble

Rule 1. Know the Law Rule 2. Don’t Settle for a Bad Decision Rule 3. Assume a Transparent World

Thanks