New Ethical Guidelines Set For Insurance Pros

The new ethical guidelines consist of seven canons to guide our behavior. There are no specific rules within this code and no enforcement procedures. The hope is that individuals who are not CPCUs within the insurance business will voluntarily use the guidelines in their day-to-day activities.

Supporting the new guidelines is an online course offered to all at no charge, approved for continuing education credit in 49 states. While the course is provided free, to obtain CE credit, a 50-point online test must be passed and a nominal $5 administrative fee paid. All information necessary to use the new course for continuing education credit is available at the website of the Institutes (www.aicpcu.org).

The course begins with a definition of terms. All too often people confuse what is an ethical decision with what really is a moral or legal decision.

This part clearly explains that moral decisions are simply making a choice between a right and a wrong decision. Similarly, a legal decision is between what is legal to do and what is illegal.

Neither are ethical decisions, which are those made when there are two or more "right and legal" decisions.

The second section outlines and explains seven characteristics of professionalism.

The third section explains the relationship between an insurance professional and high ethical standards. In short, high ethical standards are essential to be a professional. The roots of the ethical standards are described as to their regulatory requirements, social responsibility and economic outcome.

Next is an explanation of the ethical responsibilities a professional has toward the three major groups with which the professional deals–insurers, policyholders and the public. The lesson identifies the perspectives of each group and their relative interests in an insurance transaction.

With the first four lessons as background, the fifth lesson examines ethical dilemmas. A procedure is introduced that helps the insurance professional clearly understand the ethical issue at hand.

The first step is to identify those with a stake in the issue or those most affected by the ethical problem. Second is to determine the motivations for the actors that brought about the ethical dilemma. The third step is to analyze all of the relevant ethical issues involved in the dilemma, as there may well be more than one.

With the ethical issues identified, the next lesson begins by introducing three theories for the resolution of the ethical dilemma. The first of these is the rules-based theory–if there are laws or regulations that apply, they must be followed to have an ethical decision.

Second is the situation-based theory, in which all potential outcomes of a decision are examined. The essential goal is that the ethical decision made should be the best outcome for the most people affected.

The third theory is called people-based, with the essence being the "golden rule." An interesting sidebar in this presentation is the introduction of five golden-rule variations from faiths other than Judeo-Christian. The positive and negative aspects of each theory are presented.

However, the theories in themselves do not end the methods presented to resolve an ethical dilemma. Three specific tools are also introduced to help resolve any conflicts among the three theories–codes of ethics, flowcharts and checklists. The flowchart and checklist will help the insurance professional be sure all aspects of the dilemma were analyzed before a decision is made.

The seventh lesson recognizes that sometimes ethical decision-making is made more difficult by barriers. It explains certain physical, procedural and administrative barriers that may obstruct or otherwise interfere with a decision. Understanding these barriers helps the professional recognize their influence on ethical decision making.

The eighth lesson introduces the Ethical Guidelines for Insurance Professionals, consisting of seven canons or goals that insurance professionals may strive to achieve–each explained and illustrated.

The canons presented address:

• Altruism
• Continuing Professional Development
• Legal Conduct
• Diligent Performance
• Maintaining and Raising Professional Standards
• Professional Relationships
• Public Education

The final lesson applies the ethical theories and decision-making tools to case situations. The goal is to learn how to apply the material in the first eight lessons to a variety of types of ethical dilemmas, such as conflicts of interest, privacy and general business practices.

The course does an excellent job of clearly explaining what ethical problems are, and provides tools to resolve those problems. There is only a minor cost to access this material if continuing education credit is desired. There is a huge potential gain to the individual and to the insurance business as a whole from the course.

Peter R. Kensicki is a professor of insurance at Eastern Kentucky University in Richmond, Ky., as well as a member of the Ethics Committee of the CPCU Society in Malvern, Pa. He may be reached at ethics@eku.edu.