Editor's Note: This is the first article in a six-part series on adjuster ethics.
In his introduction to Winning by the Rules, Ethics and Success in the Insurance Profession, the Iconoclast identifies a number of words, each beginning with the letter “I,” that are often associated with ethics: Integrity, (implying Incorruptibility), Information (which requires Intelligence), Initiative, Ingenuity, Imagination, Individualism, and for those involved with insurance claims or coverage, Indemnification.
While these words might at first seem obvious, when closely examined, one finds that each is unique, requiring effort and study; that is mandatory.
The text explains ethics in many ways. Some, such as Peter Drucker, suggested that there is but one standard applicable to all. Thus, the law is incorruptible and must be ethically followed in every situation. This is absolute ethics, and many adhere to that principle. It is the Ten Commandments, the “Thou shalt not…” rules, perhaps akin to Sharia Law in Islamic countries. The rules become inviolate; but “law” is the minimum standard of behavior; ethics is the maximum standard.
There is another form of ethics: situational ethics. Aristotle suggested that ethics involved “conflicts in morality.” In the 21st century, many ethical decisions can only be made based on the situation and consideration of all optional responses. Can one response be more “ethical” than another? One must also consider the consequences of each decision. Most of us make such situational decisions daily.
Integrity – wholeness
We hear much about a person's “integrity,” but what does that mean? It is a term that comes from mathematics. An “integer” is a whole number. Two plus two must equal four. When one tries to make it equal something else, the result lacks integrity.
A person of integrity will act and respond in the same way in almost all situations. He or she is no different at work than at home. If Joe is the model employee, helpful, accurate and energetic at work, but at home becomes a drunken slob, yelling at his wife and children without any thoughtfulness, he lacks integrity. If Joe cheats on his income tax, he’ll eventually cheat on the boss.
Some would call it a lack of conscience; psychologically it is a form of sociopathic behavior. Joe may give lip service to honesty, but this is like mumbling prayers in a worship service and then going out and acting contrary to accepted social mores.
To which kind of ethics should an adjuster ascribe? Some rules are absolutes and must be followed. Those rules are often incorporated in laws such as the Unfair Claims Settlement Practices Act cited in most state insurance codes. It is, for example, a violation to commit with such frequency as to constitute a “general business practice … not attempt[ing]… in good faith to effectuate prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear.”
The Code implies absolutism, but the rule is hardly “absolute” in the way it must be followed. How frequent is “frequent”? What is meant by “attempt”? What is “faith”? We cannot act in “good” faith without understanding what “faith” means under the law. How fast is “prompt”? What is meant by “fair and equitable”? Equitable means even; a settlement must be “even” between both the insured and the insurer. When is liability “reasonably clear,” and what type of “liability” is meant? What is the ethical position in such cases?
For adjusters, complying with an insurance code full of ambiguous terminology, is difficult. Underwriters who compose the wording of insurance policies have the same difficulty; courts frequently find policy language ambiguous, and any ambiguity in a contract will be ruled against the party that wrote it. It was the 16th century case of Gybbons v. Martin, et al, in London's Chancellery Court that first applied this rule. The case involved the definition of “a year.” When our words and actions have integrity, the wholeness of coverage, liability and damages, we stand a better chance of avoiding disputes and staying out of litigation.
Ken Brownlee, CPCU, is a former adjuster and risk manager based in Atlanta, Ga. He now authors and edits claims-adjusting textbooks. Opinions expressed in this article are the author's own.