March is celebrated as Ethics Awareness Month in the insurance industry, and it serves as a timely reminder to all insurance professionals of the ethical commitments made to consumers and society. For agents, ethics is an ongoing consideration as moral dilemmas can arise often in conversations with policyholders. Ethical courage can be defined as “the ability to stand by morals or principles even when it is uncomfortable or risky.” Read on to learn more about ethical challenges that arise within policy language, policyholder expectations, and regulatory demands, and how independent agents can manage these ethical tests.
Ethical Courage in Insurance While Under Pressure
The insurance industry is a highly ethical one and professionals are expected to act ethically at all times. Many institutions and designations have codes of ethics that members are expected to adhere to and these codes form a basis for agents who wish to learn more about ethical standards. And while most agents understand regulations and compliance requirements, ethical courage goes beyond knowing what needs to happen and focuses on doing the right thing even when under pressure.
Agents face pressure from many sides during their day to day operations, including from:
- policyholders who want coverage bound immediately without providing necessary details
- policyholders that request a certificate of coverage that may not accurately reflect coverage
- potential clients who want advice without supplying all the facts
- long-term customers who expect extra flexibility or special treatment because of their relationship
Ethical courage happens when agents take the time to be thorough, ask questions, and seek advice when needed. Agents demonstrate this courage when they explain to policyholders why something cannot be done, even when this risks the client relationship.
Sometimes, doing the right thing can appear to be in conflict with revenue or retention goals. For example, a policyholder may want lower premiums but their agent advises against underinsuring the property, which may upset the policyholder but protects both agent and client in the long-term. Declining to place coverage that doesn’t match the policyholder’s risk profile is ethical courage, even if it risks the policyholder relationship.
Here are some additional ways to demonstrate ethical courage in insurance:
Act as an educator and advisor.
Agents are in a special role within the insurance ecosystem in that they can educate and guide policyholders toward making the best coverage decisions for their exposures. There is sometimes a fine line between advisor and order-taker. Agents need to demonstrate ethical courage to provide guidance even when policyholders expect them to simply follow instructions. If a policyholder insists on making a coverage decision that exposes them to risk, ethical courage means pushing back on that decision respectfully and with facts to ensure the client understands the potential ramifications of their choice. As always, documenting coverage discussions and declinations is critical.
Focus on internal ethics as well as external ones.
Ethical courage is not only outward-facing, it is an internal process as well. It shows up in agency operations ranging from critical decisions to seemingly inconsequential ones. Consider if staff are equipped to question directives and encouraged to ask questions or if they are expected to comply with instructions without question. Ask if documentation standards are enforced consistently or only after an incident arises. Think about how producers are rewarded, whether it is solely on volume or if they are also rated on quality, consistency, and compliance metrics. Creating an ethical culture within an agency requires an intentional effort from leadership at all levels and ethical courage grows in environments where transparency and integrity is valued.
Demonstrate ethical courage in small ways every day.
It is often not about one dramatic decision, rather ethical courage can be demonstrated through a pattern of consistent, small choices. For example, taking additional time to explain coverage to a policyholder when the agent realizes they do not understand; sending a follow-up email documenting coverage advice and decisions; saying “I don’t know” and researching the question before committing to an answer; or declining business that doesn’t fit. These small decisions help build an agency culture of trust and ethical courage.
Ethics Awareness Month reminds us that ethics remain a critical and dynamic part of the insurance business. Even as the industry changes from advances in technology, emerging risks, and regulatory demands, ethical courage means doing the right thing when it is difficult, day after day, even in quiet ways that go unnoticed at first. Ethical courage isn’t just about compliance or good business, it is doing the right thing because it is the right thing to do.
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External Links:
- https://ethics.org.au/ethics-explainer-moral-courage/
- https://web.theinstitutes.org/cpcu-canons
- https://nationaltoday.com/national-ethics-awareness-month/
