Can you teach ethics to insurance agents?

Can you teach ethics to insurance agents?

Can you teach ethics to insurance agents? Brent Kelly, an agent with Clemens Insurance in Bloomington, IL, discusses the tricky gray areas presented by insurance ethics. He also writes about sales, marketing, and business issues at

My home state of Illinois is one of the 34 states that require all licensed insurance producers to attend an ethics class. Ethics and insurance agents.  It's like peanut butter & jelly.

Why are insurance agents forced...I mean, required, to take three hours of ethics every two years? Aren't you either ethical or unethical?

I recently attended my third ethics class and have asked the aforementioned question every time I am required to participate.  

Here's the reality.  I face ethical issues every single day in my business.  I think I'm ethical.  You probably think you are ethical too.

Let me ask you a serious question. Are you always ethical?  

Did you pause?  

As much as you may think you are, I guarantee you are not.  I don't mean you are unethical in terms of a serious offense like fraud or embezzlement, but in small actions that could lead to greater consequences.  

If you are an insurance agent, ethical dilemmas are a way of life.  Why? Like any business, there could be number of reasons, but having multiple obligations is one of the biggest issues insurance agents face.  

As an agent, you have obligations to your clients, obligations to your agency, and obligations to the insurance companies.

Who do you serve first?

The obvious and most common answer is the client, but is that always the right answer?  

What if your client asked you the bend the truth a little?
What if your client asked you to go ahead and sign that paperwork on their behalf?
What if your client told you something "off the record?”

The reality is that clients (the ones who pay your salary) will often put you in the most difficult ethical positions.  

What should insurance agents do in difficult ethical situations?

The bad news is that there is no clear answer.Ethics are never black and white.  Ethics are often as gray as the clouds on a cold winter day.

Every situation is different, and every experience is unique.  That being said, every state and every insurance department has rules.  Whether you like those rules or not, you'd better be aware of them and know them.Not knowing the rules for your state or insurance department could cost you THOUSANDS!

Here's my take.

You will undoubtedly face ethical decisions every day. Some are easier than others, but when it comes to clients it can become tricky.  

You clients are your lifeblood.
You clients often become good friends.
You care about your clients.  

That doesn't mean clients ever have the right to put you in a difficult position.  

My philosophy has always been to simply follow the golden rule in all situations.  When serving multiple parties, even that can even be strenuous.  

The bottom line is that you must adhere to the regulations of your state.  

If you follow your instinct, follow your moral principles, and follow the rules, you will have a much easier time making those tough ethical decisions.  

I don't know that ethics can ever be regulated.  That being said, every insurance professional needs to take time to reflect on past decisions and prepare yourself for future ethical dilemmas.

  • John Wojtowicz 1/29/2014 10:48:10 AM
    Good thoughts from the the author. Until the insurance companies change their approach and company sales models their will always be questions in a 100% commission pay structure.
    If companies want to hire salaried agents and pay commission for products sold then the feast or famine mentality would embrace better ethical decisions.
    Just my thoughts!
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  • Mary LaPorte 2/3/2014 5:46:13 AM
    Brent, I enjoyed your article, and agree that ethics can never be regulated. I teach insurance ethics and when our state of Michigan made ethics classes mandatory, I really didn't think it would make any difference....either someone is ethical or not. But over the last several years my thinking has changed. Individuals will remark to me that some of the things we discuss in class, they never really thought about as having an ethical dimension. Also, some things we do since this is they way we were taught and/or "the way we always had done it" and perform some of our actions automatically, without thinking. By discussing these issues, individuals leave with a different perspective. One more thing I think is important to grasp in an ethics class.......part of our ethics has been developed by working with our peers over the years, learning from others. Like it or not, newer employees learn from us and model our actions. We set the tone for ethics in the future in our agencies and in the industry. I have started to believe that good ethical discussion helps raise the bar for all of us. Good article.
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  • Paul Santesee 2/3/2014 12:44:03 PM
    This was a great read. Ethics in insurance can be a struggle. I know with me, the client comes before the carrier. But 'fudging' on a policy can end up hurting the client even worse. I always paint the picture for the client flat out. I see this the most when writing auto policies. The client might have 2 addresses. I tell them, "I'll write whatever you tell me to be true, but if you were to say that the car is garaged at one address and your carrier found that that isn't true they will deny you coverage." With enough warning, I let the client make the ethical decision.
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