| Ethics: An Introduction | |||
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Gray Areas Who's Watching? The purpose of insurance is to provide protection, and in this sense clients are in a vulnerable position when they place their faith in their agent. Any violation of ethics by a financial professional is cause for concern, but an ethics violation relating to insurance is especially onerous. How ethical a person really is can be determined by what one does when no one is watching. Bait and Switch Professional and occupational "bait and switch" is not merely wrong, it is deceitful and, in most cases, illegal. The agent who sells an insurance policy that is unsuitable, inappropriate or overpriced is like a policeman who burglarizes a house or a minister who steals from the collection plate or a disgruntled caregiver who intentionally administers the wrong medication. Their positions, and perhaps their actual voices, say, "Trust me." Clear Cut or Not? You might say that some ethical situations are not so clear-cut. For example, what happens when an agent is interested in the welfare of the client without concern for the agent's own interest? Suppose the client, a close friend, wants the agent to falsify an insurance application by indicating the client as a nonsmoker. The client is strapped for cash and needs affordable coverage for his family. In the name of loyalty, the client asks the agent to go along with him. Besides, if the agent doesn't go along, the client will find someone else who doesn't know about the smoking to write the policy. Assuming no one will find out about it, falsifying the activity would surely benefit the client. Should the agent help a friend or tell the truth to the company? Most of us would say it is wrong to falsify the document, and it is. It's wrong to lie. On the other hand, most of us also would say it is good to help a friend in need. Although in this situation the truth will hurt a friend, helping a friend will cause you to lie. The situation is no longer black and white, but gray. Black, White, & Gray Consider this situation: After a variable life policy was approved, but before the final paper work was complete, a client, who is also a close friend, was diagnosed with multiple sclerosis. While completing the final paperwork, the question comes up - is there any new information? Should you report the illness to the company? You are sure they would reject the policy in light of the new information. Most of us would probably play by the book and report the illness to the company. Still, some would attempt to justify the lack of disclosure because to reveal the illness would seriously hurt the friend's security. Both situations involve us in what we can call ethical dilemmas - the "gray areas," where there are good reasons in support of an action and good reasons against it. Situations of this sort include various kinds of conflicts of interests or obligations: loyalty to a colleague vs. loyalty to one's company; loyalty to a client vs. loyalty to the company; following the requirements of compliance to the law even when the law seems unfair; breaking a confidence to prevent harm and so on. Ethical Leanings While all of the topics discussed in this course are relevant to the topic of insurance ethics, they become moot without solid commitment to adherence to ethical standards. Because the insurance industry has just emerged from intense change and competition in which the overall image of the industry was diminished in stature, much of the responsibility for ethics in insurance rest with the leadership and it is here where the best models of conduct are developed. Many agents may think that ethics are something that they read about in compulsory handbooks and training programs, but when it comes to interpreting and applying them in everyday situations, they are left to figure it out on their own. You might hear about and see dishonest and unethical behavior in the financial and professional world and feel that it is "the way things are" and that it will continue with no beacon of light for all to move toward. |
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Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and InsuranceEthics101.com, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.
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