March is Ethics Awareness Month—the perfect time for a reminder that insurance professionals must have ethical courage to operate effectively in the insurance industry.
As agents, we are the conduit through which insureds seek coverage. But we often make the mistake of seeing ourselves as only conduits and not necessarily providers of advice. Insurance must go hand in hand with professional, informed, competent risk management advice. Bearing risk improperly doesn’t benefit either the insurance company with the correct premium or the insured with the correct coverage.
A basic disconnect exists between the understanding of ethics versus morals in the insurance industry. Recent regulations of insurance departments mandating ethics as a three-hour training course are aimed at teaching people right from wrong and generally involve reviewing rules and procedures to meet compliance standards.
By contrast, ethics is the ability to identify and choose between multiple “right” outcomes. The most difficult part of an ethical dilemma is identifying that you have an ethical dilemma. We find ourselves in ethical dilemmas when we realize other avenues are available for accomplishing our shared goals, which may benefit both the insurer and the client. The good news is that people’s expectations of the insurance industry are very low. The bad news is we typically can’t even meet those.
The customer base at an independent insurance agency is divided into two clearly identifiable groups: the overall base of customers, and those who issue claims. The former requires purchase advice, access to insurers, policy issuance and billing assistance and comprises our entire group of customers for whom our insurers issue policies.
Within that group comes the latter—bringing with it needs very different from those of overall insureds. These customers need to understand the process, feel they have our attention and feel emotionally comfortable with executing a claim—a process to which most insureds are not accustomed, do not understand and don’t look forward to at all.
Unfortunately, our industry does not identify the dramatic difference between the needs of these two client groups. In fact, the risk-bearing industry seems to feel as though agents don’t have a place in post-claim execution after a policy trigger event. But an agent must practice risk management both pre- and post-loss.
The conflict between the goals of an insured client and the goals of an insurance company are so steep it often takes an intermediary to bring equity to the situation—where “equity” refers to the insurance contract as one of equity. All parties must recognize that an insurance company deserves a premium for the risk and the insured deserves an effective outcome based on the premium they pay for the coverage.
Insurers are very process-driven where agents are spontaneous. An insurer begins the day with thousands of policies to issue and claims to settle. Agents, on the other hand, have specific tasks to accomplish, but many of them are surprises. It’s no wonder that insurance companies want agents to have detailed business plans and many agents resist having a business plan at all—a conflict between process-driven work and consumer-driven advocacy.
Here’s where ethical courage becomes necessary. Often, the goals of the insurer and the goals of the customer are at such a high degree of conflict, the agent must have the courage to stand up either to their insured or to the insurance company to effect an equitable transaction.
As an intermediary, it certainly takes courage to stand up to whichever side of the transaction is seeking an inequitable outcome. It takes a great deal of introspection and thought to determine a fair outcome between these parties, who are by the nature of their promises and obligations, seemingly at odds.
Howard Candage is a member of the Big “I” Virtual University faculty and president of H.E. Candage, Inc., a company that strives to improve the image and effectiveness of insurance and the practice of risk management.