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ETHICS AND THE INSURANCE AGENT - Sandi …

2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved. 1 ETHICS AND THE INSURANCE AGENT Sandi Kruise INSURANCE Training 1-800-517-7500 2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved. 2 ETHICS .. 9 How ETHICS is Learned .. 10 Values .. 11 Principles .. 11 Laws .. 11 Rules and Standards .. 11 Norms .. 12 ETHICS AND SUCCESS .. 12 HOW WE DEFINE SUCCESS .. 12 LONG TERM VS. SHORT TERM .. 13 BELIEFS AND VALUES .. 14 HONESTY .. 14 Rationalization .. 15 ETHICS IN MODERN SOCIETY .. 15 THE INDIVIDUAL AND SOCIETY .. 16 Religion & ETHICS .. 17 Laws Versus ETHICS .. 17 ETHICS IS HARD WORK .. 18 ETHICAL DECISION MAKING .. 19 Ethical Sales Decisions .. 20 A PERSONAL CODE OF ETHICS .. 20 STANDARDS OF ETHICAL BEHAVIOR .. 22 CORE ETHICAL VALUES .. 22 RESPONSIBILITY .. 22 INTEGRITY .. 22 CARING .. 22 SELFLESSNESS .. 23 COURAGE .. 23 EXCELLENCE .. 23 THE GOLDEN VS.

© 2005-2015 Sandi Kruise Insurance Training, Sandi Kruise Inc, All rights reserved. 1 ETHICS AND THE INSURANCE AGENT Sandi Kruise Insurance Training

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Transcription of ETHICS AND THE INSURANCE AGENT - Sandi …

1 2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved. 1 ETHICS AND THE INSURANCE AGENT Sandi Kruise INSURANCE Training 1-800-517-7500 2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved. 2 ETHICS .. 9 How ETHICS is Learned .. 10 Values .. 11 Principles .. 11 Laws .. 11 Rules and Standards .. 11 Norms .. 12 ETHICS AND SUCCESS .. 12 HOW WE DEFINE SUCCESS .. 12 LONG TERM VS. SHORT TERM .. 13 BELIEFS AND VALUES .. 14 HONESTY .. 14 Rationalization .. 15 ETHICS IN MODERN SOCIETY .. 15 THE INDIVIDUAL AND SOCIETY .. 16 Religion & ETHICS .. 17 Laws Versus ETHICS .. 17 ETHICS IS HARD WORK .. 18 ETHICAL DECISION MAKING .. 19 Ethical Sales Decisions .. 20 A PERSONAL CODE OF ETHICS .. 20 STANDARDS OF ETHICAL BEHAVIOR .. 22 CORE ETHICAL VALUES .. 22 RESPONSIBILITY .. 22 INTEGRITY .. 22 CARING .. 22 SELFLESSNESS .. 23 COURAGE .. 23 EXCELLENCE .. 23 THE GOLDEN VS.

2 THE PLATINUM RULE .. 23 PROFESSIONALISM .. 24 THE EVOLUTION OF PROFESSIONS .. 24 PRIMARY CHARACTERISTICS OF A PROFESSION .. 24 THE HALLMARKS OF PROFESSIONALS INCLUDE: .. 25 COMMITMENT TO HIGH ETHICAL STANDARDS .. 26 A Carefully Conceived Code of Personal ETHICS .. 26 Altruistic Attitude and Behavior .. 26 MANDATORY LICENSING AND EDUCATION TRAINING .. 27 A Highly Unified Body of Specialized Knowledge .. 27 A Broad Educational Background Containing Generalized Knowledge .. 27 Examinations for Determining Mastery of Specialized and Generalized Subject Matter .. 28 REQUIREMENTS OF PROFESSIONAL ETHICS .. 28 2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved. 3 SKILL AND COMPETENCE .. 28 Continuing Education (CE) .. 30 FORMAL ASSOCIATION OR SOCIETY .. 32 ABILITY TO ACT WITH INTEGRITY AND OBJECTIVITY .. 33 PUBLIC RECOGNITION AS A PROFESSION .. 33 THE CRUCIAL ROLE OF ETHICS IN A PROFESSION.

3 33 PRINCIPLES OF PROFESSIONAL ETHICS .. 34 SEEKING OTHER PROFESSIONAL RESOURCES .. 34 Unauthorized Practice of Law .. 35 Fairness .. 36 The Value and Price of Being a Professional .. 36 PROFESSIONAL CODES OF ETHICS .. 37 SAMPLE PROFESSIONAL CODES OF ETHICS .. 39 INDEPENDENT INSURANCE AGENTS OF AMERICA .. 39 AMERICAN INSTITUTE FOR CHARTERED PROPERTY AND CASUALTY UNDERWRITERS .. 41 CODE OF PROFESSIONAL ETHICS .. 41 NATIONAL ASSOCIATION OF LIFE UNDERWRITERS (NALU) .. 43 The National Association of Life Underwriters Code of ETHICS .. 44 NATIONAL ASSOCIATION OF FRATERNAL INSURANCE COUNSELLORS (NAFIC) .. 44 Code of ETHICS Of the Fraternal INSURANCE Counsellor .. 44 MILLION DOLLAR ROUND TABLE (MDRT) .. 45 Code of ETHICS of the Million Dollar Round Table .. 45 THE AMERICAN COLLEGE .. 46 The American College Code of ETHICS .. 46 THE AMERICAN SOCIETY OF CLU AND CHFC .. 46 Code of ETHICS Of the American Society of CLU and CHFC.

4 47 GENERAL AGENTS AND MANAGERS ASSOCIATION (GAMA) .. 49 National Association of Health Underwriters (NAHU) Code of ETHICS : .. 50 ETHICS AND THE INSURANCE 51 PUBLIC EXPECTATIONS AND THE INSURANCE INDUSTRY .. 52 NEGATIVE PERCEPTION OF THE INSURANCE INDUSTRY .. 52 INSURANCE IS AN ESSENTIAL PRODUCT A NECESSITY .. 53 TRUST .. 54 ETHICS FOR INSURANCE PRODUCERS .. 56 TYPES OF INSURANCE PRODUCERS .. 56 LINE OF INSURANCE .. 56 Life and Health (L&H) .. 56 Property and Casualty (P&C) .. 56 FUNCTION & AUTHORITY .. 56 AGENTS VS. BROKERS .. 56 INSURANCE AGENT .. 57 INSURANCE broker .. 57 INSURANCE solicitor .. 57 INSURANCE Consultant or Analyst .. 58 EXCESS OR SURPLUS LINES BROKERS (E & S BOKERS) .. 58 General Agents and Managing General Agents .. 58 2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved. 4 AGENCY RELATIONSHIP .. 58 EXCLUSIVE VS. MULTIPLE-COMPANY REPRESENTATION .. 58 EXCLUSIVE OR CAPTIVE AGENTS.

5 59 INDEPENDENT AGENTS .. 59 DIRECT WRITERS .. 60 AGENCY LAW PRINCIPLES -- THE CONCEPT OF AGENCY .. 60 THE THREE TYPES OF AGENCY .. 61 AGENCY BY APPOINTMENT .. 61 AGENCY BY ESTOPPEL .. 61 AGENCY BY RATIFICATION .. 62 AUTHORITY OF AN AGENT .. 62 EXPRESS AUTHORITY .. 63 IMPLIED AUTHORITY .. 63 APPARENT AUTHORITY .. 63 LIMITATIONS ON AUTHORITY .. 63 SELECTING INSURANCE COMPANIES TO REPRESENT .. 64 DUE DILIGENCE IN BUSINESS .. 64 FINANCIAL STRUCTURE OF INSURERS .. 65 Gathering Company Information .. 66 STATUTORY FINANCIAL REPORTS .. 66 INSURANCE COMPANY RATING SERVICES .. 66 GUARANTY ASSOCIATIONS .. 67 UNAUTHORIZED INSURERS .. 68 COMMISSIONS .. 68 CAPITAL & SURPLUS .. 70 INVESTMENT OF ASSETS .. 71 INSURANCE INDUSTRY REGULATION .. 71 THE HISTORY OF INSURANCE REGULATION .. 71 THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC) .. 72 NAIC Model Laws .. 72 STATE AND FEDERAL LAWS GOVERNING INSURANCE .. 72 LAWS REGULATING AGENT ACTIVITIES.

6 73 LICENSING OF AGENTS .. 74 Eligibility for License .. 75 APPLICATION FOR LICENSE .. 75 CONTINUATION/EXPIRATION/RENEWAL OF LICENSE .. 76 TERMINATION OF APPOINTMENT .. 77 LICENSE SUSPENSION/TERMINATION .. 77 DISCIPLINARY ACTIONS .. 77 STATE INSURER REGULATION OF POLICY PROVISIONS .. 79 RATES ARE REGULATED BY LAW .. 80 INSURANCE COMMISSIONERS INVESTIGATE .. 80 UNFAIR TRADE PRACTICES .. 80 UNFAIR MARKETING PRACTICES .. 81 2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved. 5 DECEPTIVE SALES PRACTICES .. 81 USING EUPHEMISMS FOR " AGENT " .. 82 Misleading Terms .. 83 LIFE INSURANCE IS LIFE INSURANCE .. 83 Vanishing Premiums .. 84 Private Pension .. 84 SALE OF LIFE INSURANCE AS A RETIREMENT PLAN .. 84 PREMIUMS AND CASH VALUES .. 84 INSURANCE VS. INVESTMENTS .. 85 85 FALSE OR MISLEADING ADVERTISING .. 86 NAIC Guidelines for INSURANCE Advertising .. 87 FALSE FINANCIAL STATEMENTS.

7 87 REBATES AND INDUCEMENTS .. 88 Gifts are Rebates .. 89 Exceptions .. 89 Referral Fees .. 89 LOWBALLING .. 89 BOYCOTT, COERCION, AND INTIMIDATION .. 90 Boycott .. 90 Coercion .. 90 Defamation .. 90 UNFAIR DISCRIMINATION .. 90 REDLINING .. 91 FEE BASED COMPENSATION .. 92 COLLECTING BOTH FEES AND COMMISSIONS .. 93 UNFAIR CLAIMS PRACTICES .. 93 UNFAIR CLAIM SETTLEMENT PRACTICES ACT .. 94 PENALTIES FOR AGENTS .. 96 False Application Statements .. 97 Unfair Trade Practices of Lienholders .. 97 AGENT INTEGRITY .. 97 REPORTING CHANGES .. 98 Penalties .. 98 A PRODUCER S DUTIES AND RESPONSIBILITIES .. 99 COMMUNICATION .. 99 CONFLICTS OF INTEREST .. 100 THE AGENT AS A FIDUCIARY .. 100 REASONABLE CARE .. 101 PROVIDE INFORMATION AND FOLLOW-UP .. 101 ACTING AS A TRUSTEE .. 102 ETHICAL SELLING .. 102 ETHICAL SALES CONCERNS .. 102 AGENT Duties .. 102 2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved.

8 6 AGENT S RESPONSABILITIES TO THE CLIENT .. 103 Meeting the Client s Needs in a Suitable Way .. 103 Maintaining Proper Coverage .. 103 Communicating Clear and Specific Information .. 104 WHEN THE AGENT ALLOWS MISCONCEPTIONS .. 104 The .. 104 SELLING TO NEEDS .. 105 SUITABILITY .. 105 Service After the Sale .. 106 THE PROFESSIONAL SALES PROCESS .. 107 WORKING WITH SENIORS OR DISABLED CLIENTS .. 107 How Sales Professionals Represent their Products .. 109 Obtaining Information from Seniors .. 110 Implementing Plans for Impaired or Disabled Clients .. 112 KEEPING IN TOUCH AFTER THE SALE .. 113 CONSEQUENCES OF A BREACH OF RESPONSIBILITY TO CLIENTS .. 113 PROVIDING SERVICE TO CLIENTS .. 114 LAPSED OR CANCELLED POLICIES ARE COSTLY .. 114 Ongoing Service .. 114 MARKETING AND ADVERTISING .. 115 Sales Tools .. 115 ADVERTISING AND SALES LITERATURE .. 116 Motivation of Prospects and Clients .. 117 Words to Avoid.

9 117 Modifying Sales Tools and Methods .. 118 COMPLETE AND HONEST PRESENTATION .. 119 DISCLOSURE .. 120 STANDARDIZED DISCLOSURE MATERIALS .. 121 DISCLOSURE LETTERS AND DISCLOSURE FORMS .. 121 TELEPHONE SOLICITATION .. 122 ONGOING DISCLOSURE .. 122 SPECIFIC DISCLOSURE ISSUES IN LIFE INSURANCE MARKETING .. 123 ADVERSE TAX CONSEQUENCES .. 123 MODIFIED ENDOWMENT CONTRACTS (MECS) .. 123 USING POLICY LOANS TO CREATE TAX-FREE INCOME .. 123 PENSION MAXIMIZATION .. 123 PROPERTY/CASUALTY INSURANCE .. 124 PRESENTATIONS, ILLUSTRATIONS, AND QUOTES .. 124 ILLUSTRATIONS .. 127 Ethical Issues Surrounding Illustrations .. 128 NAIC MODEL FOR POLICY ILLUSTRATIONS .. 129 ADVICE TO 130 EXPLAINING POLICY BENEFITS AND LIMITATIONS .. 131 THE AGENT S RESPONSIBILTIES TO THE INSURANCE COMPANY .. 131 CAREFUL SOLICITATION .. 133 COMMINGLING FUNDS .. 134 2005-2015 Sandi Kruise INSURANCE Training, Sandi Kruise Inc, All rights reserved.

10 7 CONSUMER PROTECTION .. 135 ETHICS & COMPETITION .. 136 PROMOTING ETHICAL BEHAVIOR .. 137 The Agency Environment .. 138 Reasons to be Ethical .. 140 GREED & ETHICS .. 141 ETHICS FOR INSURANCE BROKERS .. 142 THE INSURERS RESPONSIBILITIES TO POLICYHOLDERS .. 142 DUE DILIGENCE IN HIRING AGENTS .. 143 STATE REQUIREMENTS FOR BACKGROUND INVESTIGATIONS .. 143 COMPLAINTS AND AGENT CONDUCT .. 144 CANCELLATIONS/NONRENEWALS .. 144 THE INSURER'S RESPONSIBILITIES TO AGENTS .. 145 COMPENSATION .. 145 EMPLOYMENT .. 145 INDEMNITY .. 146 CLEAR COMPLIANCE DIRECTIVES .. 146 AGENT SUPPORT AND TRAINING .. 146 FRAUDULENT AND ILLEGAL ACTIVITIES .. 147 FRAUDULENT CLAIMS .. 147 AGENTS AND UNDERWRITING .. 148 POST CLAIMS UNDERWRITING .. 148 Failure to Obtain Full and Complete Client Data .. 148 FIELD UNDERWRITING .. 149 THE APPLICATION .. 149 Misconceptions .. 151 Premiums .. 151 BINDERS AND CONDITIONAL RECEIPTS .. 151 BINDER.


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