Filed Under:Agent Broker, Coverage Issues

Cross the Bridge

Don’t wait for an ethics dilemma to decide your actions

Welcome to March, long-time National Ethics Awareness Month for the insurance industry. And by "long-time," we are talking before Enron, Wall Street (the original, not the sequel) and well before any regulator dreamed up the idea of how great it would be to require ethics training.

Forgive my sarcasm, but in my experience the vast majority of agents are honest folks. And by this time of life, it may just be baying at the wind to think any of the criminal minority will go to a 3-hour class and emerge with a head-slapping revelation.

I am a true believer in the power of ethics—not as "right versus wrong" but "right versus right." Too often it is thought that if one just eliminates the wrong answers, the right one will be obvious. If that were true, good and honest folks would never find themselves a deer in the headlights, paralyzed or struggling when facing a "right versus right" ethical conundrum. Their mistake was buying into the practice "We’ll cross that bridge when we come to it." Or "When the time comes, I’ll know the right thing to do." Thus they get totally blindsided by what they never saw coming.

The answer is, in fact, to cross that bridge before you come to it. You know the right thing to do because you already have made the decision before the time comes. In other words, practice.

Related: Read Amrhein's pervious column "Beautiful Brevity."

So how does one practice for ethical decision-making?

One very effective way is to work through case studies based upon real-life situations actually faced by real people involved in real jobs. For example, consider this plight (taken from my Street Level Ethics class) faced, in one form or another, by more than a few agents:

Your prospect has been open and honest about seeking proposals from several agents in addition to yours. You arrive for your appointment confident that you have done the job right and have a great deal for the coverage he needs. To your chagrin, following your presentation, he tells you he has received a significantly lower quote that provides far better coverage. You ask if you might see it, to get a better understanding of what you can do to improve your services in the future. Seeing no reason to object, the prospect hands you the winning proposal, which you are amazed to find is a package written by one of your own carriers.

Because you write the product yourself, you are well aware it is comprehensive in coverage and highly competitive in premium. In fact, if you didn’t know the prospect’s business was ineligible for the package, you would have proposed it yourself. The ineligibility does not arise from the prospect, but rather from another occupancy in the same building. You also realize part of the competitive price results from the carrier largely delegating the underwriting of the package to the agency, so there is only a slight chance the carrier will ever inspect the business and discover the ineligibility.

Your competitor who presented the proposal is new to the industry, and you can easily understand how he made such a mistake. The package is clearly a great deal for the prospect, who you believe is not going to understand the underwriting "technicality." You also have no desire to disparage or embarrass the other agent for what is most likely an innocent "rookie" mistake. What do you do?

Related: Read another column by Chris Amrhein "Rain Blame."

As you consider your answer, keep in mind the real goal and value of ethics for already good and honest insurance folks is to create trust for ourselves and our industry. In a very real sense, trust is all we sell: a promise for future delivery of critical funds in exchange for current payments. Until that claim day comes, clients have to trust our promise is true. And when that claim day comes, Lord have mercy on the agent or adjuster who must explain that promise will prove empty due to some insurance technicality no client will ever understand.

Although a complete study of ethics is beyond this article, let me summarize the three approaches I find most useful to help you make a decision in situations such as the case study above:

  1. Situation-based: What is the best outcome possible given these circumstances
  2. Rule-based: Follow the rules and let the chips fall where they may
  3. People-based: Follow the Golden Rule; what would you have others do if faced by the same situation.

As each approach has its strengths and weaknesses, there is no one right path—although I believe with practice you will find one that best fits your personal choices and style. And because the goal is to create trust, the more consistent and predictable your decision path, the more you and those around you will trust your decisions—even those who don’t personally care for the outcome.

Applying these three paths to our case above, here are possible considerations:

  1. Situation-based: Even though the carrier may never find out, the prospect has an unfair advantage over other tenants of the building, who are being written correctly. If the carrier does find out, the other agent’s reputation and future ability to place business with that carrier is likely to be impaired, and this account is clearly not worth the long-term damage to a valued carrier relationship. Maybe an informal visit to the agent’s supervisor, whom you’ve long known from serving with your local agents’ association, can settle the entire issue quietly, leading the other agent to withdraw his erroneous proposal without any damage beyond a possible unhappy prospect.
  2. Rule-based: The underwriting rule has a valid purpose, because the other exposure in the building significantly increases the fire hazard. Although the insured may not be happy, the package should never have been offered, and you have an obligation to the carrier to let them know of the error.
  3. People-based: The decision will vary depending whether the "people" you focus upon is the carrier underwriter, the client or the new agent. If the underwriter, you must let him know he is being put on a risk in error. If the client, you want her to know what she may be risking by accepting the flawed proposal and the error is discovered. If you focus on the new agent, it creates entirely different issues: When you were new, you made similar mistakes, and you are certainly glad no one called you on the carpet or took away one of your then few accounts over such an error, so will you just let this one go; or drop by to see the new agent for a bit of experienced advice to withdraw the error before the carrier finds out.

Note that while all three paths will lead to right and honest answers, those answers may be in direct conflict with each other—yet you must choose just one. Which will it be? Which, in your opinion, will build the greatest trust in our industry and your own professionalism? Which will best allow you to sleep well tonight? Which best fits your own beliefs and style to the extent that you have no doubt facing the same basic facts in any future case you will make the same decision, thus building consistency, predictability and trust in yourself and others watching you?

Related: Read the article by Chris Amrhein "Think Like the Dickens."

To paraphrase Tom Hanks’ manager in "A League of Their Own," "Ethics is hard. If it wasn’t hard, everyone would do it."

This March, honor National Ethics Awareness Month and practice building trust in your professionalism.

Time to cross that bridge.

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