What are the ethical responsibilities of insurance industryemployees to promote long-term career interest in their professionwith both their time and money? Are producers and insurersethically bound to actively recruit new blood into thebusiness?

Most National Underwriter readers responding believe there areeither ethical or logical duties for some employees and insurers,but the degree of the ethical responsibility varies primarily byposition.

For example, on the question ofproducer and insurer duties, an executive of a state insurance planwrote: “I don't see it as an ethical issue. However, you shouldstrive to make sure your recruits are all ethical beings so thebusiness we are in will continue to have ethical representation toprotect our reputation.”

This reader added that “we should continue to support stronglicensing requirements for insurance agents. A hair dresser has toperform 1,500 hours of training. Yet to be in the insurancebusiness–a position that could financially ruin someone's life–youonly need 40 hours of classroom training and need to pass anot-too-hard exam.”

A Nebraska agent responded by questioning an ethical duty torecruit, but added: “Ethics would apply to the process of hire, thefairness of pay and the ethical treatment of employees orproducers. The decision to recruit is a perpetuation choice, albeitone should recruit ethically.”

An Illinois producer also questioned any ethical duties toactively recruit new blood, but said ethics are a concern oncepeople are hired. “As an agent, it is good business to bring inyoung people. I do think it is an ethical responsibility to teach,train and compensate new, young employees by surrounding them withthe highest ethical standards in your agency or company.”

His reasoning, he said, is that “trust is one of the mostimportant components in the success of a new producer. High ethicalstandards produce trust. Therefore ethics are the lifeblood of anagency and will guarantee success.”

An Ohio agent agreed there is no ethical duty to hire newproducers–with a caveat: “There are no ethics in requiring anyoneto sustain their business by hiring new producers. However there isa fiduciary responsibility to the shareholders and policyholdersbased on the corporate charter.”

This agent argued that “perpetuation in this business can nolonger be sustained within the family. We choose to perpetuate ourbusiness through aggressive methods to find the 'right' person forour profession.”

He also noted that “we need to demand from our regulators ahigher degree of professionalism to perform our responsibilities tothe consumer. This can be achieved through more rigorous testingfor licensing in a very complex world of contract law.”

As to the same ethical responsibilities for an insurer, thestate plan executive noted: “Maybe the senior officers of theinsurance companies have a moral responsibility to ensure new bloodenters the business so that long-term obligations to insureds andclaimants are met. But I don't think that they believe they havethat responsibility. The average underwriter or adjuster probablydoes not believe he or she has an ethical duty to interest othersin insurance.”

A property underwriter wrote that “as human beings we have anethical obligation to ensure the continuation of our species. Thatwould include passing along essential skills and knowledge tofuture generations.”

This reader added that while “I do not think insurance isessential for the survival of our species, it is important for itscontribution to our economic and physical well being…”

The Nebraska agent commented that “the responsibility toactively recruit new blood will vary depending upon what capacityone is employed within the insurance business.”

“A CEO of an insurer has the responsibility to perpetuatelong-term careers within their company, as it is vital to thesuccess of that insurer and its place in the marketplace,” thisagent said. “Conversely a clerical employee has ethical duties towork hard for the employer, but may not have an opportunity tosupport the long-term career objective of others.”

Those supporting an ethical duty to both seek new employees andinvest time and money in long-term careers were primarily CPCUs.For example, a commercial property underwriter wrote that “asCPCUs, we are required to put the interests of our customers aboveour own. To fully embrace this would include an ethical imperativeto support long-term career interests and recruit new blood.”

A consultant with the CPCU designation cited three rules fromthe Society's Code of Professional Ethics:

o “A CPCU shall support personnel policies and practices whichwill attract qualified individuals to the insurance business,provide them with ample and equal opportunities for advancement,and encourage them to aspire to the highest levels of professionalcompetence and achievement.”

o “A CPCU shall encourage and assist qualified individuals whowish to pursue CPCU or other studies which will enhance theirprofessional competence.”

o “A CPCU shall not initiate or support the CPCU candidacy ofany individual known by the CPCU to engage in business practiceswhich violate the ethical standards prescribed by this code.”

A home-office CPCU cited yet another rule from the Code: “CPCUsshould be diligent in the performance of their occupational dutiesand should continually strive to improve the function of theinsurance mechanism.”

This reader added that “as the insurance human resource poolages and there is a shortfall of incoming employees, we have anobligation to support efforts to effect improvements in insuranceoperations that will benefit the public and improve the efficiencyof the insurance function.”

Overall, all responding agreed that, ethics aside, it makes goodbusiness sense to seek new blood for the insurance business, andthat given the current economic conditions, a greater group ofpeople are now available for insurance employers.

The group of respondents was split about 50-50 on ethical dutiesthat would apply to all employees. However, those with or who arepursuing the CPCU designation have clear ethical duties to seek outethical and qualified new recruits, and to also invest time andmoney in their long-term careers.

The consultant mentioned a recent article by a manager who“likes to hire hungry new employees with 'the money gene.'”

While acknowledging that money can be a motivator–given that, atleast for producers, insurance is one of the few businesses thatprovides the opportunity to earn unlimited income–the consultantbelieves that “to best benefit the future success of our business,I would suggest we recruit new blood that has 'the ethicsgene.'”

To assist in finding individuals with the “ethics gene,” theCPCU Society has challenged all members to live up to their ethicalresponsibilities with its “Each One, Reach One” campaign. “Reachingout to prospective CPCU students is part of our mission asprofessionals,” the group says.

Peter R. Kensicki is a professor of insuranceat Eastern Kentucky University in Richmond , Ky., as well as amember of the Ethics Committee of the CPCU Society in Malvern, Pa.He may be reached at [email protected].