The Oxford dictionary defines ethics as “moral principles that govern a person’s behavior or the conducting of an activity.” Ethics then are guiding principles that are based upon moral values. Moral values are defined by society, religions, governmental entities, and individuals.
Firstly, it’s the law. There are both state and federal laws that deal with licensing, rebating, privacy, unfair claims practices, discrimination, and other matters. But it’s not only the law — it’s good business to be ethical. Customers want to do business with a company or person they can trust. 65% of consumers have cut ties with a company or brand over a singular poor experience (source); you don’t want to ruin your reputation or the reputation of your firm or the insurer.
Not only is being ethical the law and good business but insurance is built on utmost good faith. The policyholder, agent, insurer, and adjuster all must give accurate and complete information necessary to underwrite the business, adjust the claim, and/or pay a claim. If all of these roles work together, the end result is a long-term relationship that is profitable to the insurer, agent, and adjuster, and provides peace of mind and indemnity for the policyholder.
Sometimes it’s tempting to bend the rules to achieve a rewarding objective. However, adjusters, agents, or managers who encourage or ignore unethical behavior do so at the peril of their job or business. Making the decision to be unethical or ‘bending the rules’ comes with consequences, such as loss of a job or contract, or legal ramifications. Here are some questions to ask yourself when trying to figure out if it’s ethical:
Investopedia defines unfair claims practices as improperly avoiding a claim or an attempt to reduce the size of a claim. These are tactics that insurers practice to reduce costs or delay payments to policyholders, and many times it’s illegal. The insurer has an obligation under unfair claims practices acts to settle the claim both promptly and fairly. Below are unfair claims practices that adjusters should avoid:
Finally, the work of adjusting insurance claims engages the public trust, therefore adjusters are held to a high ethical standard. Adjusters must put the duty for fair and honest treatment of the policyholder above the adjuster’s own interests in every instance. Do your due diligence to research individual states’ Codes of Ethics, as well as your IA firm’s Code of Ethics.
Here are some basic guidelines:
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