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Ethics in the Insurance Industry

March is Ethics Awareness Month in the insurance industry. This has become an annual event, sponsored by the Insurance Institute for Applied Ethics and the CPCU Society, and endorsed by a number of industry organizations. In keeping with the spirit, below are some "ethical dilemmas."

Below are several "ethical dilemmas." After reviewing them, please email me your opinions on the proper ethical response at Bill.Wilson@iiaba.net and we'll post your responses.

Ethical Dilemma #1

The Case of Who'll be "Broker"
"The market is the place set apart where men may deceive each other." -- Anacharsis (c. B.C. 600), Greek sage and inventor

A broker/agent projects that his client's renewal workers compensation experience mod will be 1.35. The worksheet is received from NCCI with a 0.95 mod, with several obvious errors that, if corrected, would increase the mod. The broker/agent explains the situation to the insured and advises that the error may or may not (probably not) be caught by NCCI or the carrier. The client asks, "What should we do?"

How should this be handled?
If you'd like to submit your opinion, email it to: Bill.Wilson@iiaba.net

CLICK HERE to view reader responses.

Ethical Dilemma #2

The Case of the Questionable Insurance Company
"The safety of the people shall be the highest order." -- Cicero (B.C. 106-43), Roman statesman and orator

You are an independent agent that has over 800 accounts with a fairly small regional carrier. The A.M. Best Company has just lowered their rating from an "A-" to a "B+" following a drop from an "A" the prior year. Being a rural agent, you've had trouble obtaining viable markets and have worked diligently in placing quality business with this company. You don't think it would be possible to roll this book of business to another company; in fact, you don't even have a market for many of your insureds if they individually wanted to move their business to another company you represent...but your competitors do. The company in question, despite rumors to the contrary and mounting circumstantial evidence, assures you that "all is well."

Should you notify your insureds of this rating downgrade?
If you'd like to submit your opinion, email it to: Bill.Wilson@iiaba.net

CLICK HERE to view reader responses.

Ethical Dilemma #3

The Case of All's Fair in Love, War and Insurance
"The right to do something does not mean that doing it is right." -- William Safire (b. 1929), U.S. political writer

An agent/broker had worked diligently for over three years to land a major account, even going so far as to spend time at the public library and on the internet to become more knowledgeable about the prospective client's industry. His effort and perseverance finally paid off when he landed the account and spent substantial time booking the business. The only problem encountered was that the workers comp had to be placed in the assigned risk plan.

The servicing carrier assigned to the client had previously considered this account, but did not pursue it because the nature of the business would have necessitated significant time and expense to determine insurability. During the process of gathering information and conducting a preliminary audit and loss control survey necessitated by the workers comp assignment, the company decided that this could be a desirable account.

Based in large part on the information gathered by the company and that provided by the agent, the company's representative made an impressive and informed sales presentation just before the next renewal. The deal was too good for the client to pass up, so he accepted it. When the agent was informed of his customer's decision, he was devastated.

Did the insurance company behave ethically?
If you'd like to submit your opinion, email it to: Bill.Wilson@iiaba.net

CLICK HERE to view reader responses.