Obtaining new clients is always a challenging task for most insurance agents, and even more so when a current prospect is actively shopping around.
In your communication with the prospect, the prospect may mention another agent or agency, or talk about products offered by a carrier. This may lead to the temptation to badmouth that other agent, agency or carrier.
Perhaps you know the competition, and have legitimate concerns about the way that agent, agency or carrier conducts business. This does not give you license to make disparaging comments directed at the competition, and there are many good reasons to refrain from doing so.
Defamation is the deliberate attempt to discredit the name and/or reputation of another entity by means of false, malicious or derogatory statements. And if it can be proven that you communicated the derogatory information to another—verbally or in writing—you may be in line for an expensive lawsuit that will probably cost you much more than a new client would ever make you in commissions or fees.
If an agent is in competition with a life insurance company, and the agent tells a potential client something like they have heard the company is having financial difficulties, is laying off agents and closing offices. If any of this is untrue, the agent is defaming that company and acting unethically.
It all comes down to a commitment to ethical marketing practices. Agents that do this can enhance not only their own reputation, but that of their agency and the carriers they represent.
Besides being the right thing to do, ethical marketing can have significant benefits for your business. For example, if you display integrity and new clients believe you will live up to your word, loyalty will develop, customer retention will rise, and those new clients will be more likely to provide referrals.
Agents that don’t commit to ethical marketing risk ruining their own reputation instead. There have been plenty of examples in the news recently of agents or agencies engaging in unethical marketing practices becoming targets of market conduct investigations by state insurance boards, which can lead to fines, restitution, license suspensions or revocations.
Defaming another company, product or agent in order to make yourself, a company or agency look better is actually less of a problem now than it used to be, according to veteran insurance consultant and industry ethics advocate William K. “Bud” Bridgers of Pleasant Grove, Utah.
“This type of behavior is almost always confined to the young, new agent or advisor and the branch or regional sales managers. It is less of problem than it used to be because financial firms are experiencing an increase in people moving to another company or carrier on a regular basis,” Bridgers said. “Larger firms are buying advisors’ books of business as an incentive to make the move. At least two to three times a year I read of a large ‘team’ of advisors that have moved their business from one large firm to another.
So, the company you defame today could be a firm that in the future may pass you by—or not offer to buy your book—in favor of another team that had a higher sense of professional propriety, he said.