National Ethics Awareness Month
By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE – Vice President/Media Editor
March is designated as National Ethics Awareness Month – in the insurance industry and elsewhere. The value of a good reputation, for both businesses and individuals, cannot be overstated. It can take years to build a reputation and minutes to destroy it. Ethical principles provide a framework for life and business. Reputable companies attract and retain better employees, and experience increased loyalty from their customers. Helping your clients understand the importance of ethical business and personal practices is another value-added service of the professional insurance agent.
The problem of unethical behavior or practices is widespread. The Yale Center for Emotional Intelligence study of 14,500 employees in a broad spectrum of industries found that 23% of employees felt pressured in their jobs to do things they know are wrong. Examples included breaking rules, violating safety protocols, lying and discrimination. In the same survey, four of five respondents said they felt pressured not to speak up about the unethical situation(www.hbr.org).
The insurance industry often gets a bad rap on the question of ethics. Gallup surveys over the years consistently rank insurance near the bottom of the list of professions when it comes to perceived ethics and integrity. Consumers may feel that they are at a disadvantage, as insurance is required for many activities from driving a car to owning a building or running a business. Agents are in a position of trust – the customer has a need to trust the insurance professional to provide the products that are in the client’s best interest, and not necessarily that of the agent. Accordingly, insurance producers must be fair, transparent and objective in their client dealings.
Insurance is a highly regulated business, following statues and laws promulgated primarily by the individual states. The purpose of regulation is to promote fair competition and protect consumers from abuse. There are a number of ethical principles that can be applied to insurance and business in general. They include competence, confidentiality, diligence, fairness, integrity and professionalism. Competence involves having the knowledge, skills and ability to do the job properly. Examples include having knowledge of the products being sold, including benefits, limitations and exclusions.
Interpersonal skills are needed for the insurance producer to be able to communicate effectively – both in obtaining information about the client’s needs and in explaining the products being recommended. Insurance concepts need to be relayed in language that people can understand. The agent must instill confidence that he or she knows what he is doing.
Integrity, including honesty, moral, objective and unbiased behavior, is essential in the insurance industry. The diligence principle means that the agent must be thorough when collecting information and preparing proposals for their client. Professionalism means agents are courteous and dignified in their dealings with clients, their advisors and other insurance professionals. Confidentiality is especially important with regard to privacy regulations. Client information can be shared only when authorized by the individual, or if required by law, such as in response to a subpoena.
Ethical behavior is very important in the insurance sales process. For those who sell insurance, there are two main ethical considerations. First, is the product suitable for the situation and second, has there been a full disclosure of the risks and benefits? The need for ethical behavior does not stop when the insurance sale is made. One of the “golden rules” of ethics for insurance professionals is to treat every claim as if it were your own. An insurance contract is a promise. The insurer must settle claims promptly and fairly. Unethical practices include withholding payment, delaying payment, creating excessive barriers to settlement with never-ending request for additional documentation, or low-balling the offer. All of these can lead to a poor perception of the insurance industry by the public.
Ongoing education is a key factor in the success of the insurance professional. In most states, licensed insurance producers are required to complete continuing education courses in order to renew their license, including at least three hours of ethics education every two years. Having designations is a sign to the customer that the insurance producer is serious about their profession and continuing their education and expanding their knowledge in the field.
Breach of ethics can result in job loss, reduced morale, fines and other penalties. Unethical behavior may result in loss of a license to do business, or loss of the business itself. The rise in use of social media can exacerbate the situation when negative posts are shared. Understanding the value of practicing ethical behavior is another sign of the true insurance professional.
