Ethics for the Insurance Professional

1. Ethics for the Insurance Professional Presented by Chris McLeod CPCU,CIC,ARM,AAI,AIM,AIS,API,AU,CRIS,CPIW,CISR President Smart Choice Agents Programt High Point, NC

2. Statistics to Think About • 1 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

3. Statistics • 1 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

4. Statistics • Americans feel the #1 cause of business decline is low executive ethics!

5. Definitions • Ethic • A system or moral standards or values • A particular moral standard or value

6. Definitions • Ethics – • The study of standards of conduct and moral judgment; moral philosophy • They system or code of morals or a particular person. . . Group or profession

7. Definitions • Ethical • Conforming to moral standards; conforming to standards of conduct of a given profession or group

8. My View • JUST DO WHAT IS RIGHT!!!!!!

9. Definitions • Moral • Honest • Integrity • Legal

10. Why be Ethical? • Social Responsibility • Contractual Responsibilities • Avoid Public Criticism • Avoid Government Regulation • Minimize Errors or Omissions

11. 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?

12. Core Principles • Is there diligence in the pursuit of excellence? • Most importantly, is it altruistic?

13. Why do people Act Unethically? • Inadequate training • Poor Reasoning • Self Deception • Self Protection

14. Business Ethics and Public Stakeholders • Insurance Agent and Insurance Company Management Relationships

15. Business Ethics and Public Stakeholders • Insurance 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?

16. Duties owed by the Agent to the Company • Do 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?

17. 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?

18. Duties owed by the Company to the insured • What information should the insurance company divulge to the agent about an insured.

19. Agent’s fiduciary responsibility to their Insurance Company • Does 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?

20. Agent’s fiduciary responsibility • Should an agent give one insurance company’s quote to another insurance company also represented by the agency?

21. Duties owed by the Agent to their Customer • What 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?

22. Duties owed by the Agent to the Customer • Should 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?

23. Miscellaneous Duties • Duties owed to the Public? • Competitive Advantage vs Ethical standards • Soliciting New Accounts

24. Legal vs Ethical • Unfair Trade Practices • Misrepresenting the terms of a policy • Making untrue statements • Making false statements regarding the financial condition of an insurer • Filing false statements • Unfair discrimination • Intentionally establishing unfair premiums

25. Ethical Decision Making • Is it an ethical question or legal issue • Gather all information • Who are the stakeholders and what are their rights? • What are the alternatives • Reach a decision • Monitor the decision

26. Scenarios • What are the ethical issues? • What should the Agent do? • With the Customer • With the Insurance Company • With the current Agency

27. 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. • Please complete the evaluation form provided