Transcript Integrity and Decisions

Integrity and Decisions
Real World Questions In Insurance
Fact: Insurance Agents have
Independence/Autonomy
• Many of you are independent-- lots of
latitude
• Who gives you feedback, keeps checks
your motives/behavior?
• Question: Do you talk to other agents
about what you do?
Responsibilities in Business:
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To your Insurance companies
To Customers
To employees
To boss/es
To your family
To your community
To God
The challenge:
Balancing Responsibilities
Key tension in the business
• How do you balance your desire to sell
and your service to customer?
• This is found in any business:
(AA & Enron, Salespeople, Doctors)
Typical Challenges:
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sell client what they need
know what you are selling
are they fully covered?
Are they over covered?
Why do insurance people do the
wrong thing:
• Why do they sell client more than what
they need?
• Why don’t they fully cover clients?
Lots of Pressures!!!
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Pressure from Boss
Pressure from Vendors
Pressure from Clients
Pressure from personal situations
Pressure from performance expectations
Pressure from fellow employees
Moral Decisionmaking:
• How do you decide the right thing to do?
• How do you help others to make right
decisions?
CPCU Society Ethics Code
• Specified Unethical Practices
1.To violate any law or regulation duly enacted by any
governmental body whose authority has been established by
law.
2.To willfully misrepresent or conceal a material fact in insurance
and risk management business dealings in violation of a duty
or obligation.
3.To breach the confidential relationship that a member has with
his client or with his principal.
4.To willfully misrepresent the nature or significance of the CPCU
designation.
CPCU Ethics Code (cont’d)
5.To write, speak, or act in such a way as to lead another to
reasonably believe that the member is officially
representing the Society or a chapter of the Society
unless the member has been duly authorized to do so.
6.To aid and abet in the performance of any unethical
practice proscribed under this Section.
7.To engage in conduct which has been the subject of a
presidential or Board of Directors directive to cease and
desist.
CPCU Guiding Questions
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Questions to help decide if the situation
or decision has ethical dimensions
– Is it legal but unethical?
– Is it necessary?
– Does it involve a core ethical principle such
as honesty, integrity, truthfulness, etc.?
Guiding Questions: Info
• Information gathering questions
– Who are the stakeholders and what are their
rights?
– Consider the source, reliability, and accuracy
of all relevant information.
– Who should be involved in this decision?
– Do I have enough information to make a
sound ethical decision? If not, how do I get
it?
Guiding Questions: Options
• Questions to help identify and evaluate
alternatives
– Am I rationalizing to justify what I want to do?
– Am I using anyone for my own personal gain? (Who
will be injured and how)
– Are there conflicting loyalties to stakeholders?
– What would result in the long run if everyone did this?
Guiding Questions: Conclusion
• Questions that help in reaching a decision
– Could I defend my position before the Board of
Directors, the CEO, or the media?
– What would ______________________ do? (Fill in
the name of the best role model you know.)
– Will this seem to be the right decision a year from
now? Five years from mow?
– Do I have the moral courage to take the more ethical
course of action? (Am I willing to pay the price for my
convictions?)
Example
• In discussing a premium quote with a
customer, you ask them to remind you
how far they drive to work each way. “Oh,
5 miles”, they say. You know that they live
15 miles from the town they work at.
• How do you handle this?
Example 2
• You explain to a client what the minimum
coverage entails on their policy. They say
that they only want the minimum. You
know they have quite a lot of assets and
probably should protect themselves more.
What do you do?
Submitted Example
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An employee in a small department becomes aware that
the representative for one of the vendors being
considered for a contract is the relative of their Vice
President. The VP does not give any indication this is a
relative. Our company policy requires clear disclosure of
relationships with external parties.
This appears to be a conflict of interest, but if the
employee reports it, the VP will know it was reported by
one of a very few people in their department. How
should the employee handle this situation? Even though
our company has a strict "no retaliation" policy, there are
bound to be some hard feelings, but the employee is
uncomfortable dealing with this rep.
Submitted Example
• The company, either publicly traded or private, has a
statement publishes its ethics policy on the public portion
of its website. The policy includes a statement that the
company will follow all applicable laws. However,
executives tell management that the goals must be met
(sales, revenue, etc.) and imply or sometimes even
directly state that if legal requirements have to be bent or
even broken to achieve the goals, then that is what
management is expected to do. Executives only state
this verbally – nothing is in writing. In this environment,
what options do ethical managers have?
Example
• We are always competing for customers
with other agents. Sometimes when we
are filling out a clients info we will leave
some things vague, or ask questions in
such a way that we won’t need to find out
about potential problems– in short, we
don’t lie, we just don’t try too hard to find
the truth…
Case Example
• Talk about being in the right place at the right time! One of your
small restaurant accounts has been chugging along for years with
fairly level sales. But due to new building development nearby, that
restaurant is suddenly one of the hottest spots in town. Her sales
are going through the roof, and every Friday when you stop for
lunch, she is beaming ear to ear at the crowded dining room. On the
one hand, you are happy for her new-found success. On the other,
you are dreading renewal time. You know that when the carrier finds
out about the much higher sales figures, it will do an audit that will
make her head spin. You’ve tried to prepare her for it, but since
she’s never had to pay an additional audit premium in the past, you
aren’t really sure she has gotten the message.
Case 1 continued
• Renewal time comes and goes, and lo and behold, no
audit appears. You drop an e-mail to the underwriter and
ask where the audit is in the pipeline. To your surprise,
the return e-mail says that past audits have generally
revealed that these types of accounts generate
insufficient additional audit premiums to justify the
resources and effort. So the carrier’s position is now
simply to close the policy year on these accounts without
an audit. As you read the message on your computer,
you find yourself with mixed emotions. Your client just
caught a major break, but you also know the carrier is
leaving a lot of money on the table. What’s your next
step?
Case Example #2The Life of a Field Underwriter
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One of your top agencies is positively salivating at the next trip your
company is sponsoring. But there is one fly in the ointment. In addition to
the increase in property and casualty premium required for the agency to
qualify, your employer has added a life requirement. While minimal, the rule
has been handed down from on high—no matter how much P&C the
agency writes, without at least one life insurance application during the
qualification period, the agency isn’t going. You can’t believe that in an 18month period, an agency of this size hasn’t written a single life insurance
policy with your company, but this one hasn’t. When you called and asked
about it, the agency told you quite clearly that your company’s life insurance
policies are among the worst in the business, and they can’t ethically place
any of their clients with you when the agency has other carriers with vastly
superior life products. Besides, they find it hard to believe you would
disqualify them from the trip considering the amount of P&C they place with
you.
Case 2 continued
• While relating this tale to one of your compatriots, he suggests a
simple solution. “Call them up and tell them to write a policy on
YOU.” When you question the wisdom of this, and also point out you
really don’t need another life policy, your compatriot responds,
“Okay, then you tell them they aren’t going on the trip. Look, a
couple of my agencies were in the same boat, so I bought policies
from them. Nothing extravagant, just enough to qualify them for the
trip. Once the trip is over, I’ll drop the policies, with no harm done.
You know they deserve to go, and our life products are pretty lousy.
Why punish the agency for doing the right thing by their clients?”
• You have to call the agency. Are their trip plans dead, or do you get
a life?
Example
• You are applying for Long Term Care Insurance on
December 7. The agent asks you birthday which is Nov.
4, 1947 making you 59 years old for rating purposes.
Your agent says, if the birthday is within 30 days of the
application date (so no earlier than Nov. 8), agent can
use prior year (58) for rating purposes. Agent says,
here’s what I’ll do since you’re so close to the cutoff. I
don’t send my applications in until the end of week, we’ll
just date everything December 4 and we’ll be OK.
• Do you sign the documents with the actual date of
application December 7, or do you take advantage of the
agent’s offer and date everything December 4?
Case 3: Matching Siding?
• These hail storms are enough to drive an adjuster crazy! As you pull
up to the umpteenth house turning in a claim from the most recent
golf-ball-size bombardment, you can already tell what’s coming. You
can see from the driveway that on the front and one side of the
house, the siding looks like it’s been hit by grapeshot fired from a
cannon. It will definitely have to be replaced. Walking around the
outside of the house with the owner, you note the other side and
back seem untouched. You tell the owner you can approve replacing
the two damaged sides, but there will be no need to pay anything for
the other two. “But wait a minute!” the owner cries. “This siding goes
back a few years.
Case 3 Continued
• There is no way those new sides are going to match the old ones. If
they don’t match, my house is going to look stupid. And I know folks
who tried to sell their homes with siding that didn’t match, and they
took a huge hit on the selling price. So it seems only fair that you
replace all four sides. After all, every bit of this problem was caused
by the hail storm.” You understand his problem, and in fact, find his
argument reasonable. The policy speaks to replacing damaged
property only. While the argument as to whether siding which no
longer matches is considered “damaged” is one often debated by
coverage experts, the basic insurance principle of making the
insured “whole” certainly favors the owner’s viewpoint. With all the
hail damage in the area, you know no one will question your
decision on this claim. What do you decide?
Case 4: Who shall pay?
• You can’t believe what you are holding in your hand. This
should have been the simplest claim in the world to pay,
but not any more. For some reason, of the hundreds of
polices you have seen from this carrier on this type of
account, this one is totally messed up. The usual
endorsements are missing, including the one that
provides coverage for this particular claim. When you
check with the underwriter, he claims the agent asked for
the policy that way. When you call the agent, she tells
you she just asked for the typical policy.
Case 4 continued
• So one of them made a big mistake, but you don’t know
which. All you know for sure is that this insured is being
given the honor of paying for the mistake. You know if
this account had been handled by standard procedures,
the claim would be covered. But you also know that
following the policy in your hand means you have to turn
it down. If you do, by all rights, the insured should be
suing somebody for E&O. Some days you just hate this
job!
• Do you decide not to punish the insured for the mistakes
of others? Or do you follow the clear language of the
policy you are holding?
Personal Scenarios
• Learning from each other— Some
personal scenarios!
Final Thoughts
• Often, doing the right thing is clear, even if
its not easy
• We tend to cut corners for short-term
apparently inconsequential issues, but this
can come back to haunt us
• Having Ethical Habits takes practice, and
some thoughtfulness.