The human misery in front of you is overwhelming, and there's no way you can handle this flood of people, much less expect them to understand you can't pay them anything until you have the proper information. Asking people who just lost everything if they remember their policy number would border on cruelty. Maybe it would be worth paying out some money to the fakes if it means the truly deserving get at least some help quicker. What do you do?

Note that you're not being asked to choose right from wrong, but rather right from right.
It's right not to pay out carrier funds, belonging to true clients, to fraudulent claimants.
It's right to be compassionate.
It's right to stick to the rules, protect your carrier's solvency and explain you can't pay out claim funds until you have proof of loss and valid insurance.
It's right to make exceptions to the rules when dire circumstances call for reasonable variations.
A wrong choice would be stealing the money or paying it only to an agent's buddies or favorite clients. Or choosing not to choose, thus abdicating your responsibilities as a professional sent to help insureds recover after a loss, and failing to fulfill the carrier's promise made when it issued the coverage.
But after considering all those "rights," you can make only one decision. There's no delaying and no escaping from responsibility. You either write the checks or you don't. That's a true ethical situation. How do you choose when every choice seems right?
Valid ethics training is not about telling you what to do in every situation. In the insurance business, totally unexpected situations can arise. You'd think after more than 30 years I would have heard and/or stumbled across just about everything, but nooooo. I still get questions or read of claims that are unique and perplexing. Like the adjuster above, you assume everything will be normal, but then you find yourself unsure what to do next.
While a complete study of ethics is beyond this article, let me summarize three useful guidelines to help you make a decision in situations such as the case study above.
o Situation-based: What is the best outcome possible given these circumstances?
o Rule-based: Follow the rules, and let the chips fall where they may.
o People-based: Follow the Golden Rule: What would you have others do if faced by the same situation?
Here's the type of reasoning possible if we apply each of the above guidelines to the case study:
Situation-based: Write the checks. The small amount that may be paid fraudulently is dwarfed by the needs of the claimants. Besides, in the long run, the goodwill the carrier will reap from this gesture will more than compensate for any financial loss from fraud.
Rule-based: Typical claims rules never anticipated anything as catastrophic as this–no coverage records, no way to verify insured status, or even prove who is and isn't insured. But you can't just throw the rule book away, either. Maybe you can ask agents in the area to vouch for each claimant before you release the money or at least get enough information from each claimant (name of agent, amount of coverage, location of home, how many years insured) to try to create some semblance of credibility to the process. Without some assurance of proof of loss from a valid claimant, policy rules would tell you not to write the check.
People-based: Write the checks. If you were the one standing in line, having just suffered the loss of everything you owned, that's exactly what you would want–and deservedly so.
You can see that honest folks can still arrive at opposite decisions. Since each choice can be "right," it follows no one who chooses differently from you is "wrong." We simply arrive, through a solid process of following valid guidelines, at different possibilities. It is in understanding that we all strive for fairness and consistency that trust is built. And building trust–not choosing right from wrong–is the goal of pursuing ethical behavior.
So what if you were our adjuster? If you think the answer is obvious–much ado about nothing–an interesting but factual detail may make you reconsider your dismissal of the process. In a recent claims Webinar, over 400 adjusters, all possessing advanced insurance designations, were presented with a case study essentially identical to the one above. They were also presented with the three guidelines for making their decisions. At the end, they were asked to vote: Do you write the check, or don't you?
As Dave Barry is wont to say, "I am not making this up." The final vote was split right down the middle–50% wrote the check, 50% said "no."
If you thought the answer was "obvious," think again. And next time, make sure your ethics class gives you real-world challenges, not simplified morality plays and regulatory summaries. When confronting "right versus right" dilemmas, you want to learn how to reinforce your client's trust, not confirm their worst suspicions.
Chris Amrhein is an insurance educator and speaker with more than 30 years in the industry. He is also chief fun officer of www.insuranceisfun.com, where his newest book of insurance musings, "Yes, Virginia, There Is Insurance," is now available. Readers may contact Chris at chris@insuranceisfun.com.

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Policy Issues: Building Trust is the Goal of Ethical Behavior

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