Establishing ethics for insurance professionals

By Dan Corbin | September 25, 2006

The American Institute for Chartered Property and Casualty Underwriters (AICPCU), the American College and the Society of Financial Service Professionals founded Ethics Awareness Month in 1990. While it is impossible for all insurance professionals to reach consensus on every aspect of their ethical ideology, those professional organizations have recognized the merit in providing a platform for continued ethics awareness and discussion.

When discussing professional ethics, it is necessary to examine the core beliefs and underlying precepts that comprise our particular value system. What forms the basis for your values–is it religion, philosophy, family, tradition, society, mentor, etc?

For the good of the society, we should not unquestioningly embrace just any value system. I propose we consider at least three universal precepts that exist in nearly every civilized society and in most every religion: honesty, respect for other persons and respect for others’ property. Those ought to be the qualifying parameters for any belief system chosen by an insurance professional.

Core beliefs
The first tenet of the triad is honesty. Without honesty, there is no chance of a successful business relationship. While dishonesty is destructive in one’s personal life, it usually is fatal in business. People are inclined to be more forgiving in personal relationships than they are in business relationships. One dishonest act can tarnish an entire career. Would you buy anything from someone you knew to be dishonest?

The second tenet of the triad is respect for other persons, meaning respect for a person’s physical and emotional well-being. Disrespect could manifest itself by such actions as rudeness, harassment, slander, discrimination, abuse, assault and murder. Some transgressions of this tenet, as well as the other two, are so nefarious that there are laws against such behavior. While there may be no law against rudeness, would you continue to do business with someone who was rude to you?

The third tenet of the triad is respect for a person’s property. Disrespect could manifest itself by such actions as neglect, carelessness, vandalism, theft and destruction. Property and casualty insurance producers are in the express business of preserving the assets of clients. Disrespect for a person’s property is the antithesis of the noble mission of an insurance professional. Would you knowingly conduct business with people who cheat their customers out of money or property?

Once you have identified the basis for your values, ask what authority that basis holds over your life. How can someone be moral or ethical without accountability? I could never trust a person who does only what is right in his own eyes. Of course, everyone is ultimately accountable to our justice system, but that is negative accountability, occurring after the deeds have been done. To whom you have voluntarily made yourself accountable? That is the real question.

Find your own accountability upon which to build your ethics. Do you live to make your family proud by following their example? Are your core values derived from your religious faith? Have you embraced the code of ethics offered by professional organizations, such as, the Professional Insurance Agents or the Chartered Property and Casualty Underwriters? The important thing is that you know where your ethical foundation lies and to whom you have made yourself accountable.

People do not always behave in a way that is consistent with their moral code. In other words, people do not act according to their beliefs at all times. We all are hypocrites, to some degree. There is something about our nature that gets in the way of moral perfection.

Overcoming the tendency to deviate from our moral code requires discipline of will. Unfortunately, discipline is unpleasant, and people are naturally averse to it. That is where accountability is of great assistance.

For example, accountability benefits the maturing of children. Initially, a child fears his parent’s punishment, so he or she submits to the will of the parent. Soon, a child learns that acceptable behavior has its rewards and behaves appropriately to receive the prize. Later, the child finds pleasure in meeting the parents’ expectations and behaves in way that will accomplish that goal. Then, when a child goes to school and experiences the relational friction with peers, he or she discovers the merit of conforming to societal norms. A child matures as he or she realizes the benefit of behaving in certain ways. Finally, those values are internalized and, hopefully, become who the person is.

When you act consistently with our beliefs, no matter what the circumstances, then you have integrity. Someone with integrity is the same whether they are in the light of public exposure or in the darkness of solitude.

We cannot speak of accountability at work without considering the moral compass communicated by managers of the company. Business ethics are imparted by both official policy and practical example, but they are, undoubtedly, more “caught” than taught.

In your insurance agency, you could read the moral direction by the way management treats such matters as the proper licensing of employees, fair treatment of competitors, full disclosure to insurers and faithful control over other people’s money. The two areas where producers are most vulnerable are in their stewardship of money and handling of information.

Using a scale of one to 10, where one means “anything goes” and 10 means “above reproach,” where does your agency fall?

Think for a moment about the impact a manager has on subordinates. If the manager has moral clarity and a disciplined will, the worker will be governed by the manager’s integrity. If the manager has moral clarity but an undisciplined will, the worker will be governed by the manager’s hypocrisy. If the manager has moral confusion but has a disciplined will, the worker will be governed by the manager’s tyranny. If the manager has moral confusion and has an undisciplined will, the worker will be governed by the manager’s anarchy.

On one end of the spectrum are people who work solely for monetary gain (called mercenaries) and on the other end are people who work to pursue a vocation (called professionals). Henry David Thoreau proposed this aspiration: “Aim above morality. Be not simply good; be good for something.” That simple statement goes a long way toward defining a professional.

To be an insurance professional means having a passion about coming alongside people to help when they are experiencing some of the worst moments of their lives. As we all have recently seen in the Gulf States, this industry has heroes who go far beyond their job expectations and give selflessly to those in distress. Closer to home, I am privileged to observe more than 100 volunteers serving their Glenmont Professional Insurance Agent associations as officers, directors and committee members. Some of them toil numerous hours each week to help the industry achieve its full potential.

A mercenary who sells insurance is going to consider the buyer a customer; someone who purchases a product or services. A professional, on the other hand, views the buyer as a client.

“Client” is derived from a Latin word meaning “lean,” which portrays someone leaning upon another for support. A client, then, is someone under the care and protection of a professional. You can choose to be a mercenary or a professional. You don’t need higher education or a promotion to make that choice.

A caveat
Without a doubt, if you assure your client that you will protect them against all or specified risks of loss, you have expanded the ordinary legal duty of a producer and made yourself vulnerable to lawsuits. Unless you intend to incur greater liability in exchange for competitive differentiation, you should maintain a working ethic to treat all policyholders as clients, without actually communicating such promise to the client.

Remember, becoming the person you want to be is a process that takes time and discipline. Sometimes, we need a nudge in the right direction, but the key to growth is accountability.

Dan Corbin is the director of research for the Professional Insurance Agents of New York State, New Jersey, Connecticut and New Hampshire.

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