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Life Health > Health Insurance

Avoiding ethics violations from unlikely sources

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Ethics cut both ways. That means violations aren’t always fueled by nefarious intentions.

Sometimes its laziness, sometimes carelessness and sometimes it stems from an effort to help. An anecdote from the P&C side of the business illustrates our point. While circumstances may differ, the outcome for your life, health and annuity lines could be the exact same.

Case in point: A long-time friend of the agent in question inherited his parents’ house and had trouble with insurance due to an environmental issue. It might have been a detached oil storage tank or lead paint on its walls or some other issue—the agent wouldn’t say. What he did say is that when he asked his friend if the home had the particular environmental issue, his friend said no, and even indicted as much on the application.

After he left the agent’s office one of the CSRs noticed the application wasn’t signed. She called the friend to inform him of the “oversight.” He then asked her to sign if for him.

“Just mark it up, scribble something,” he purportedly said. Knowing he was the agent’s friend for 30 years and not wishing to inconvenience him, she did just that. The ethical and legal violations should be overwhelmingly obvious, but if no one knows, what’s the big deal?

Right? Not so fast.

The friend paid one month’s premium to insure the coverage and policy process was complete and then bypassed the agent and sent a letter directly to the carrier in order to file his claim. The carrier naturally kicked the letter back to the agent with some obvious and rather large questions. The agent was understandably upset, but understood any misrepresentation on the application would cause the coverage to be nullified—that is until the “friend” informed him that 1) it wasn’t his signature and 2) he never received a phone call to inform him of the oversight. It didn’t matter anyway, the “friend” taunted, the coverage was issued and premium was paid.

The agent now faces the dissolution of a 25 years relationship with the carrier at best, legal sanction and the loss of his business at worst. There’s an awful lot of he said/she said and the outcome is far from certain, but it all stemmed from a three minute phone call and a naïve willingness to help. It’s why specific, detailed, written procedures are so important, especially in today’s compliance-centric, E&O free-for-all legal environment. Horror stories like this must also be shared with staff to illustrate why a particular policy is in place. Understanding the motives behind it go a long way in ensuring all are on board. It will nip any potential ethical violations that stem from (sadly) a desire to help.


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