The latest Question Of Ethics we posed to readers of NationalUnderwriter involved an insured calling to report a loss thatappears to be questionable. What are the ethical responsibilitiesof an agent for this type of claim? Do the responsibilities differif the producer is a broker? There were no differences noted foragents and brokers if the questionability of the claim related tocoverage. However, there were differing opinions as to how tohandle a claim if it appears the claim is questionable because offraud. Read on and weigh in.

NU Ethics Columnist Peter R. Kensicki--professor of insurance atEastern Kentucky University in Richmond, Ky., as well as a memberof the Ethics Committee of the CPCU Society in Malvern, Pa.--foundthat in general, differences in responses on an agent's ethicalresponsibilities can be summarized as follows:

If a claim appears to be questionable, the producer should:

Report the claim only.

Report the claim and note the specific factual information aboutthe claim that the agent has.

Report the claim and note any information or suspicions held bythe agent.

For questionable claims from a coverage standpoint, allresponding believed the ethical obligation was to report theclaim.

The vast majority also suggested it was ethical to pass onwhatever factual information the agent had relative to the claim.Full disclosure of claim facts is necessary, said an IndianaE&S broker. No one thought it was ethical to give the insuredan opinion that the claim was either covered or not covered.

Most differences among the questionable coverage replies relatedto whether the producer was an agent or a broker. While both agentsand brokers should report claims with questionable coverage to thecompany, the issues were whether or not additional informationshould be given the company and what the role of the producerduring the claim adjustment process should be.

Generally, most responding suggested a coverage advocacy rolefor a broker, but no one suggested that an agent advocate coveragewhen reporting a claim.

An Ohio account executive noted both agents and brokers have theduty to report all relevant facts.

An Oklahoma producer said: Agents must report the claim in anyeventits your duty. And, provide what information you have. Thesame holds true for a broker. A broker can advocate coverage, butnot at the expense of his or her ethics.

A New York producer said a broker should be an advocate forcoverage by presenting a logical theory of coverage on behalf ofthe insured.

It was universally noted that agents of insurance companieswitha contractual obligation to accept notice of lossmust pass anynotice submitted by an insured on to the insurer. The logic wasthat a contract is a legal document, and professionals have anethical responsibility to act within the law. Therefore, report theclaim.

An Illinois producer put it this way: As a company agent, we areethically and contractually bound to report the claim.

An Indiana attorney wrote, If you are an agent of an insurancecompany, it is your duty to report not only the claim, but also thecircumstances of the claim.

A trainer in Missouri suggested the agent be committedlynon-committal to the insured. Tell the insured the adjuster willlook at the facts of the loss and determine coverage under theapplicable contract. If necessary, read the relevant language tothe insured, but let the insured come to his or her ownconclusion.

The New York producer said: My job is to report the claim. Thecompanys job is to accept it or reject it.

Another agent simply said, Unless you know it is a 100 percentfraud, report the claim and let the adjusters do their job.

An Arizona underwriter replied: All policies require quicknotice of loss. An agent must report a loss notice he or she hasreceivedespecially if it relates to a bodily injury claim.

A New York producer put it this way: Give the claim to theinsurer and let the chips fall where they may. Dont get in themiddle of any questionable claim.

Most comments on the question of reporting a questionable claimrelated to assumptions that the claim was fraudulent or suspicious.Under that assumption, all respondents still believed an agent mustreport the claim, and most still noted the need to provide allrelevant factual information when reporting the claim.

Most responding also added other ethical tips.

The Arizona underwriter believes all insurance professionalsmust respond in this situation with all relevant facts, beliefs andfeelings. If you are ethical, you represent the whole insuranceindustry and all that it should represent, he said, suggesting thatthe producer also request special claim handling on a suspiciousclaim.

Many respondents identified legal requirements in their statesaffecting their behavior with a suspicious claim. In New York,agents and brokers must report fraud, wrote one New York producer.Talk with the police or other appropriate law enforcement official,wrote the Ohio account executive.

A Maryland producer suggested that the producer attempt to find,to the best of his or her ability, if the claim is fraudulent. Ifthe belief is that fraud is involved, tell the insured the claimmay not be supportable and explain the consequences of fraud.

This producer, if pressed by the insured to report a fraudulentclaim, would (1) refuse, (2) give the insured the informationnecessary to report the claim directly to the insurer, and (3) getrid of the insured.

One of the New York producers warned against counseling theinsured not to file a claim. If the producers suspicions of fraudare incorrect, counseling not to file the claim could blow up in myface later as more facts become known. The suggestion instead wasto let the insured file the claim directly.

A Georgia consultant also suggested counseling the insured ofthe penalties for fraud if the claim was believed to befraudulent.

A Florida agent agreed, but added that he would also explain tothe insured exactly why the claim appears to be suspicious.

An Ohio claims executive believed the ethical approach for bothagents and brokers with a suspicious claim is to not only counselthe insured as to the consequences of filing a fraudulent claim,but also tell the insured that if requested, the claim would bereported and that the producer will disclose all information aboutthe claim.

The Illinois producer believed a broker should do the same thingan agent should do, and that it made no difference whether theclaim was suspicious or not. Report the claim if requested.

The Indiana attorney revealed why he believed a professionalproducer to whom a fraudulent claim was reported should not beoverly concerned with also reporting the known facts to thecompany. A summary of his opinion begins with the fact that aprofessional always acts in the best interests of the client.

However, with agents and brokers the potential for dualrepresentation exists and is well known in the business. Therefore,both an insured and the company should know that a producer willnot always act solely in the interests of each.

Both agents and brokers need trusting relationships withinsurers. Insureds come to agents and brokers because of theproducers relationships with insurers. Insureds should respect andacknowledge that all producers must deal honestly with insurancecompanies. That would include reporting all known and relevantfacts about a suspicious claim.

One respondent was from outside the insurance business. A realestate developer and manager from the Northeast offered his advicefor agents and brokers with a clearly suspicious claim: Iffraudulent, do not assist with the claim in any manner. He alsosuggested advocating for the insured if the claim was questionableas to coverage.

In summary:

Ethically, both a broker and an agent must report claims thatare questionable as to coverage to the insurer.

Brokers should also feel ethically comfortable in advocating forthe insured in these situations.

Agents should report claims that are questionable as tofraud.

Brokers in this situation may want to consider counseling theinsured as to the implications of filing a fraudulent claim.

If the claim is clearly fraudulent, a broker may be comfortablenotifying the insured that the broker will not file the claim, but,at the same time, giving the insured information so that theinsured may personally file.