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Ethics and Insurance — Insurance Ethics Questions and Answers

Insurance agents, brokers, and others in the industry are bound by ethical standards. But sometimes insurance ethics questions arise — and it can be challenging to know the right answer to ethical dilemmas.

March is Ethics Awareness Month in the insurance and risk management industry. Take a moment this month to read up on ethics and consider how you apply these standards in your daily work.


Insurance Ethics Questions and Answers for Agents and Brokers

Agents and brokers often have insurance ethics questions as they manage their businesses and work with policyholders. Sometimes pausing to think and consider your options is the best way to handle an ethical concern.


Here are some common insurance ethics questions and answers:

How do I give advice ethically?

Insurance agents and brokers advise their clients on a daily basis. One way to be sure you are following ethical standards is by knowing your product and services well. If you are recommending one type of coverage over another, you have to understand why it benefits your client.


How can I protect myself from ethical concerns?

Invest in continuing education about ethical concerns for insurance agents and brokers. In addition, be sure your E&O coverage is sufficient for your business. If you haven’t updated your coverage in a while, you may need to increase your limits if your exposures have grown. Get a free quote for your E&O insurance now!


What should I do if I notice a red flag for fraud?

Red flags are indications to investigate further. If you notice something is off in an insurance application or have a doubt about a new client, you should look into it. Ignoring red flags can lead to a fraudulent claim or policy. It’s important to remember a red flag doesn’t always mean fraud — investigate it or report your concerns to your fraud unit for more help. Auto insurance fraud costs the industry close to $30 billion every year, according to the NAIC. Acting when you notice something is possibly wrong can help in the fight against fraud.


How can I handle a conflict of interest?

If you have a conflict of interest with a potential customer seeking your services, there are several ways to handle it. Talk with your manager or leadership first if you have someone above you who can advise you. Transfer the potential customer to another agent or broker at your agency and recuse yourself from accessing their files. Or refer the potential customer to a colleague at a different firm, to remove yourself from any appearance of a conflict.


How can I protect others in my office from ethical concerns?

Ethical issues will always arise in insurance. But you can set up policies and procedures to help protect other agents and employees from risks. You can use a code of conduct and ethics code to shape habits and use policies to prohibit unethical behavior. Create an environment where employees feel empowered to ask tough questions and talk about ethical concerns. Offer annual training to give employees an update and a chance to learn more about ethical decision-making.


Additional Resources to Answer Insurance Ethics Questions

The great thing about our industry is that you never have to face challenges alone. There are many great resources to help you grow your knowledge and find answers to your ethical questions.


Take a refresher ethics class.

There are always ethics courses offered for CE credit. Enroll in one every year — or more often — to update your skills. Refresher courses are important for every professional to help you reset and look at ethical questions from new angles. Sometimes having new information through education can help you make a better choice.


Talk with your mentor or another agent.

Sometimes just talking through challenges and insurance ethics questions with other professionals helps. Your mentor, manager, or colleague has probably been there before and can point out new perspectives to consider. If you don’t have a mentor, finding one can help you develop personally and professionally.


Follow the code of ethics of your designation.

If you hold a professional designation, like a CPCU or CIC, you may already have a copy of their code of ethics. Reread any code of ethics and guidelines you have from designations you hold to reinforce ethical habits. Your professional designation may have an ethics board or committee you can ask questions to — take advantage of this complimentary advice.


Join an affinity group.

Independent agents and brokers need a membership affinity group designed for their specific needs, like the American Agents Alliance. When you become a member, you’ll gain access to valuable blogs, discounts, and a vast network of peers to help with your ethical questions.

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