Transcript Ethics In The Insurance Industry

 This
is the presentation that Ted
Pappas used when he was chosen
to speak at the NAMIC
(National Association of Mutual
Insurance Companies)
Commercial Lines Seminar on
February 28th, 2008 in Chicago.
Ethics In The Insurance Industry
Theodore M. Pappas,
CLU, CIC, CWCA
Ethics Awareness Month for the
Insurance Industry
MARCH
What We Sell
NOTHING
But A Promise
OUR PROMISE:
To pay a claim in the event of an
unknown contingency
To Sell An Intangible
All you have is your credibility
and perceived honesty
What Do We Know About Our
Industry?
Eventually you will be between a
rock and a hard place
“Perhaps THIS Will Refresh Your Memory”
We have a fear that there are a
finite number of customers
“Entrepreneurs have this horrifying sense
of scarcity, that the customers they have,
are the only ones in the world”
-G. Richard Shell
Prof. Of Legal Studies & Management
Wharton School,
University of Pennsylvania
Defending an E&O claim is…
…A Liars Contest
Your Reputation,
Past ethical behavior,
will be the key issue
If you have a history of :
Misrepresenting a risk,
being creative in rating a risk
or – simply ignoring the rules
That will be used to discredit you
REMEMBER
A jury of your peers has
absolutely no idea how or what
you do for a living
If the opposition can demonstrate
you are less than ethical…
“Touche!”
ETHICS:
A system of moral standards or
values
ETHICS:
Rules or standards governing the
conduct of a person or members
of a profession
Easy To Define?
Different people and different
organizations have different
standards and values
An action considered ethical by
one may not be considered
ethical by another
Early on we learned it
is wrong to kill
In time of war?
Capital Punishment?
To steal to feed your children?
If it’s difficult to answer these
questions covered by rules or
laws, it’s more difficult to answer
business ethical questions
Business Choices
Not between Right and Wrong…
…but between 2 RIGHT answers
LAW:
Minimum Standard
Ethical Behavior
Abides by the spirit of the law
Qualities Society Views as Ethical:
Honesty
Integrity
Responsibility
Respect
Courage
Ethical Decision:
Make best choice in compliance
with duty
Rather than the best choice for him
or her personally
Primary Cause of Unethical Behavior
Conflict of Interest
Conflicts of Interest
Do not equate to unethical behavior
Think of them as temptations to resist
Conflicts of Interest
Arise from unique circumstances
Relationships
Business Arrangements
Not known to the other party
TRANSPARENCY
-Eliot Spitzer
Impossible to eliminate all
conflicts of interest
Acting Ethically
“Doing The Right Thing”
What are my legal duties and
contractual obligations?
What benefits, what costs or harms
each course of action produce?
Which alternative leads to best
overall results?
Does one course of action best
respect the moral rights of all?
Is one course of action fairer to
all the parties than are the others?
Examples of Ethical Behavior:
Only making promises you can keep
Fulfilling all promises you make, or
explaining why they can’t be fulfilled
Honesty in all communications
Stay within your area of expertise
Never oversell your knowledge or abilities
Disclose bad news timely
Disclose unavoidable conflicts of interest
Work through proper channels
Maintain confidences
Quickly admit and rectify mistakes
Associate with others known for
their ethics and integrity
Join organizations that support
ethics and integrity
People who display these
characteristics are perceived as
dependable and trustworthy
Add to this
In-depth and up-to-date
knowledge on the technical side
of the business
You are an
Insurance Professional
Insurance Generates Conflicts of
Interest
Ethics Comes Down To The
Golden Rule
Golden Rule
Christianity: Do unto others as you
would have them do unto you
Judaism: Thou shalt regard thy
neighbor as thyself
Golden Rule
In Judaism: Thou shalt regard
thy neighbor as thyself
In Buddhism: Hurt not others
with that which pains yourself
In Islam: No one is a believer
until he loves for his bother
what he loves for himself.
In Hinduism: Good people
proceed while considering that
what is best for others is best for
himself.
In Christianity: Do unto others In Confucianism: What you do
as you would have them do unto not want done to yourself, do
you
not do to others.
CASE STUDIES
Sharing Information About
an insurer
Board Member Conflict of
Interest
Intellectual Property
Underwriting Information
Treatment of Employees
Application Misstatements
Gifts and Conflicts
Competitor Misdeeds
Renewal Pricing
Data Sharing
Insurance Certificates
Surplus Lines Declinations
Downsizing
Commission Levels
Referrals to Competitors
Hiring Practices
Claim Settlements
Duty to Customers
Personal Relationships and
Duty to the Employer
Rebates and Premium
Financing
“It is easy to find successful
businessmen, but not so easy to
find men who put character
above business”
- Orison Swett Marden 1908
“ Even if you are on the right track, you’ll get run over
if you just sit there”
- Will Rogers
“ Never try to fool the men you represent.
Tell them what is possible and what is
impossible to do. And look upon a single
contract as something sacred - - a pact to be
observed; an agreement which is your bond
of good faith”
- Philip Murray
“ Your word is who you are.”
- Admiral James Greer
“Good enough seldom is”
- Debbie Fields
TEST
Questions???
Special Thanks to….
D.C. Department of Insurance
Paul J. Winn, CLU ChFC
WebCE LP, LLLP
IRMI
National Alliance
Competition is an
Economic Fact of Life
1725 DeSales St. NW, Washington DC 20036
www.mclaughlin-online.com
202-293-5566
TMC
ADVANTAGE