Ethics CPCU
The Hearing Panel shall consist of three voting members of the Board of Ethical Inquiry selected by Counsel, one of whom shall be selected by Counsel to serve as Chairperson. In selecting the members of such a Hearing Panel, Counsel shall be guided by __________
(1) the geographical proximity of the residence of a member to the residence of the respondent (2) the availability of such member for service
What are the articles of the Bylaws of The Institutes, the Board of Trustees
1) Applicability 2) Jurisdiction 3) Ethics Policy Committee, Board of Ethical Inquiry, Ethics Counsel 4) Procedures 5) Penalties 6) Miscellaneous Provisions
The Ethics Counsel has what powers and duties?
1) Board of Ethical Inquiry 2) Investigate all matters involving an alleged violation of the Code 3) Dispose of all matters (subject to the provisions of IV.B. and C.) either by dismissal or the prosecution of formal charges before a Hearing Panel or the Ethics Policy Committee of the Board of Trustees 4) Appear at hearings conducted with respect to petitions for reinstatement by CPCUs whose designations have been suspended or revoked; cross-examine witnesses testifying in support of the motion and marshal available evidence, if any, in opposition thereto 5) Maintain permanent records of all ethics matters processed and the disposition thereof
CPCU procedures are composed of what?
1) a. Complaints 2) Procedures Concerning Alleged Violation of the Code by CPCUs 3) Procedure for Disciplinary Proceedings Involving Applicants for the CPCU Program
The Board of Ethical Inquiry shall, when it deems appropriate take what four actions?
1) promulgate and publish guidelines to supplement the Code of Professional Conduct 2) summarize and publish the rulings of the tribunal in cases brought before it 3) recommend amendments and additions to the Code, improvements in the disciplinary and enforcement procedures, and changes in ethics policy 4) engage in such other activities that will assist in the implementation of approved ethics policies
Which one of the following statements is correct? Choose one answer. A. A standard of "utmost good faith" exists for many practitioners who work on behalf of insurers. B. High ethical standards are not required in all professions. C. In insurance, high ethical standards are only required of insurers. D. An insurance professional should avoid being overly candid with insureds and claimants.
A. A standard of "utmost good faith" exists for many practitioners who work on behalf of insurers.
Rodrigo is the chief investment officer for an insurer. He has four investment firms vying for company business. Each has offered various inducements ranging from use of a skybox at sporting events to negotiated buy/sell transactions costs. To best comply with the CPCU Code of Professional Conduct, Rodrigo should pick the investment firm that offers the Choose one answer. A. Best combination of price and services needed by the insurer. B. Lowest transactions costs. C. Quickest buy/sell confirmations. D. Skybox at sporting events.
A. Best combination of price and services needed by the insurer.
Which one of the following statements is correct? Choose one answer. A. Business ethics are critical when an organization is threatened or faces fundamental change. B. Ethical insurance professionals always do what is required by their employer. C. Contradictory laws or societal norms set up conflicts that cannot be resolved ethically. D. Ethical decisions are best made based on feelings rather than on reason or logic.
A. Business ethics are critical when an organization is threatened or faces fundamental change.
Which one of the following statements is correct? Choose one answer. A. Continuous pursuit of knowledge, utmost good faith in all dealings, and adherence to standards and regulations all contribute to professionalism. B. Aspiring to be a professional need not require much personal sacrifice or time away from family or recreational pursuits. C. Support of family, friends, and colleagues is irrelevant to achieving the status of a professional in the insurance industry. D. Unfortunately, practitioners committed to professionalism often have difficulty adapting to changes in the global marketplace.
A. Continuous pursuit of knowledge, utmost good faith in all dealings, and adherence to standards and regulations all contribute to professionalism.
Willy works in middle management for a small insurer. He has been taking insurance courses, one of which included an ethics component. Willy believes that his employer should form a committee and develop a code of ethics. Which one of the following is the best argument Willy can make to his employer in favor of developing an ethics code? Choose one answer. A. Ethics codes provide guidance in ambiguous areas when decisions are not clear, even after the application of decision-making tools. B. Everyone is developing an ethics code nowadays. C. The act of developing an ethics code will keep several employees busy for a few weeks. D. The ethics code will be accessed by the employee on company computers, which will save on paper.
A. Ethics codes provide guidance in ambiguous areas when decisions are not clear, even after the application of decision-making tools.
Victor has just been notified that he will be assigned to storm duty and will be out of state for at least six weeks. Victor will have a substantial inventory of local claims when he returns. He could quickly settle a number of claims if he agreed with the claimant's valuation instead of negotiating. Victor is facing an ethical dilemma best labeled Choose one answer. A. Long-term versus short-term. B. Stakeholders versus non-stakeholders. C. Justice versus mercy. D. Truth versus loyalty.
A. Long-term versus short-term.
Milton is a commercial lines producer and a CPCU. While visiting a prospect to discuss the company's insurance program, Milton inquires about the prospect's risk management program. The prospective client indicates that the company has no formal risk management program in place. Milton takes the time to explain some of the limitations of insurance, and the importance of risk management to any company. He provides examples of risk management techniques the company could employ, and highlights the benefits in terms of coverage and premium savings that the prospect could enjoy if an appropriate risk management and alternative risk financing program were implemented. He also provides the prospect with the name and telephone number of a respected risk management consultant in the area. Which one of the following best describes the application of Canon 7 of the Code of Professional Conduct as it concerns improving the public understanding of insurance and risk management? Choose one answer. A. Milton is in compliance with Canon 7 because he is informing the prospect and is not speaking outside his area of expertise. B. Milton is in contravention of Canon 7 because he is promoting risk management rather than insurance. C. Milton is in compliance because Canon 7 specifically requires CPCUs to promote loss control. D. Milton is in contravention of Canon 7 because he discusses the limitations of insurance with a member of the public.
A. Milton is in compliance with Canon 7 because he is informing the prospect and is not speaking outside his area of expertise.
The claim director for Insurance Company (IC) realized that he was not on track to meet his objective of significantly lowering the number of liability claims pending by the end of the year. He was intent on meeting the goal, however, so in December he issued a verbal directive to the claim staff. He said that they could settle for more than they believed a given claim to be worth if it meant closing the file by the end of the year, as long as the coverage limits were not exceeded. One of the claim representatives, who is a CPCU, thought that this scheme could be unethical because of its potential effect on policyholder rates and the value of claims generally. Her best course of action would be to Choose one answer. A. Recognize that the issue is not hers to resolve and seek out the appropriate channels in her company in which to raise her concerns. B. Follow the directive because it has the positive effect of benefiting a stakeholder group, the claimants. C. Accept the instruction because if there is an ethical problem, she is not responsible for it. D. Ask herself to whom her duty of loyalty belongs and conclude that it is to the claim director.
A. Recognize that the issue is not hers to resolve and seek out the appropriate channels in her company in which to raise her concerns.
Sally works for Insurance Company in the underwriting department where she implements policy changes. In reviewing a policyholder's address change, Sally realizes that the policyholder deserves a refund because her policy was being improperly rated at the old address. To make the correction according to company procedures and legal requirements, Sally would have to refund the difference in premium for the last ten renewals and would have to calculate interest on each period. She decides to simply make the address change and save the insurer some time and money instead. Sally's decision is clearly unethical under an analysis that is Choose one answer. A. Rules-based. B. Situation-based. C. People-based. D. Function-based.
A. Rules-based.
Nick, an underwriting manager, is proud to have earned his CPCU designation. For this reason, he obtained a personalized license plate for his family car that reads "CPCU." Mildred, a CPCU in Nick's department, asked him if he was aware that he was in violation of a rule associated with the CPCU Code of Professional Conduct concerning proper use of the CPCU initials. He replied that he had not violated the rule, in that he and his wife own the car together and his wife works as a nurse in the "Cardiac Progressive Care Unit" of the local hospital, which is called the "CPCU" for short. He told Mildred that if anyone challenges his use of CPCU on the plate he will say it pertains to his wife's profession. Which one of the following courses of action should Mildred take? Choose one answer. A. She should urge Nick to seek advice from the American Institute's Ethics Counsel and tell Nick that if he does not do so, she will. B. She should use an ethical dilemma decision-making flow chart and recognize that the issue is Nick's to resolve, not hers. C. She should recognize that rules are aspirational only and nothing can be done. D. She should accept that Nick has found a legitimate loophole to the rule.
A. She should urge Nick to seek advice from the American Institute's Ethics Counsel and tell Nick that if he does not do so, she will.
Ming is the chief actuary at ABC Insurance and a CPCU. Ming has developed a new method for calculating incurred but not reported losses (IBNR). He has tested the method over a number of years and has found it to be much more accurate than the traditional method used by most actuaries. Because the new method gives Ming more confidence in the accuracy of his rate-making data, it allows ABC to charge lower rates than its competitors. This in turn gives ABC a marketing advantage. Which one of the following best describes Ming's obligations under Canon 5 of the Code of Professional Ethics regarding raising the professional standards of the insurance profession? Choose one answer. A. The new IBNR calculation method constitutes a trade secret and Ming is under no obligation to divulge it. B. Because the new method could benefit consumers in terms of lower rates, Ming is required to share it with other insurers. C. Canon 5 specifically prohibits CPCUs from divulging information about their employers' business practices. D. Ming should write a professional article in an actuarial trade journal describing the new IBNR calculation method.
A. The new IBNR calculation method constitutes a trade secret and Ming is under no obligation to divulge it.
Cindy is an applicant for the CPCU program. Cindy recently committed and was convicted of a felony. Which one of the following statements is true? Choose one answer. A. There is a process whereby Cindy, if deemed to be fully rehabilitated, may still pursue the CPCU designation. B. Cindy is banned for life from pursuing the CPCU designation. C. Cindy can still pursue the CPCU designation upon recommendation by a parole officer. D. There is a two-year waiting period before Cindy's CPCU studies can be pursued again.
A. There is a process whereby Cindy, if deemed to be fully rehabilitated, may still pursue the CPCU designation.
Anil is a commercial insurance producer who specializes in large, complex accounts. Anil is approached by the risk manager from Altor Systems, a company that specializes in developing special-purpose computer operating systems for use in such things as communications satellites, space vehicles, and military applications. Because of the nature of its business, Altor often finds it difficult to obtain insurance coverage, much less to obtain it at a cost the company sees as reasonable. Based on his experience, Anil is aware of two companies that might provide coverage for Altor. One, licensed in the client's home state, has very stringent underwriting guidelines and relatively high premiums. The second is a nonadmitted insurer, not licensed in the client's home state. This second insurer has much more flexible underwriting guidelines, and Anil is certain that the premiums charged would be much lower, as would be the commission Anil would earn on the account. After examining stakeholders, and motivations, which one of the following should be Anil's next course of action? Choose one answer. A. To examine any laws, regulations, and guidelines governing the situation B. To consider how his colleagues might handle the situation C. To recommend that his client deal with the non-admitted insurer D. To examine his own feelings about the case
A. To examine any laws, regulations, and guidelines governing the situation
Insurance consumer Lachlan thinks he has a legitimate complaint relative to a CPCU's actions that he believes fell well below professional competency. Lachlan files a complaint with the Board of Ethical Inquiry. Which one of the following statements best describes when the Board of Ethical Inquiry would take action on Lachlan's complaint? Choose one answer. A. When a proven violation caused unjust harm and discredited the CPCU designation B. During the investigation of the same complaint by the insurance regulator to assist in that investigation C. When notified by legal counsel for Lachlan that actions of the CPCU allegedly violated civil law D. During the investigation into the CPCU's actions by his employer
A. When a proven violation caused unjust harm and discredited the CPCU designation
Administrative barriers may prevent an insurance professional from making ethical decisions. Administrative barriers occur under which one of the following conditions? Choose one answer. A. When the processes are complicated and procedures are cumbersome B. When insufficient guidance is available regarding ethical behavior C. When key documents have been destroyed. D. When witnesses are unavailable
A. When the processes are complicated and procedures are cumbersome
Felicia is a commercial lines underwriter and a CPCU. One of the brokers that she underwrites comes into the office one day to discuss a potential account submission. The account is a golf course that includes a hotel and conference center. The account appears to be a good one - well managed and maintained. Unfortunately, the loss frequency on the account has been much higher than average over the past several years. The broker badly wants to write the account and is asking Felicia to provide a competitive quote despite the loss frequency, which the broker assures her will not continue. The broker offers to buy a membership to the golf course for Felicia so that she can visit the course regularly and "keep an eye on" the account. Which one of the following statements best describes how Felicia should handle the situation in order to comply with Canon 3 of the Code of Professional Conduct concerning laws, regulations, and unjust harm? Choose one answer. A. Felicia should decline to accept the golf course membership and refuse to write the account. B. Felicia should decline the golf course membership and underwrite and price the account based on its own merits. C. Felicia could accept the golf course membership provided she ask another underwriter to review the account. D. Felicia should accept the golf course membership if she elects to write the coverage so that she can "keep an eye on" the account.
B. Felicia should decline the golf course membership and underwrite and price the account based on its own merits.
Which one of the following statements is correct? Choose one answer. A. When an insurance practitioner aspires to develop the traits of a professional, clients are unlikely to recognize the effort. B. Insurance practitioners who are perceived as professionals will gain an advantage over other practitioners. C. Awards based exclusively on monetary accomplishments recognize an insurance practitioner's professionalism. D. The perception of professionalism is important for insurance practitioners only in terms of the public view.
B. Insurance practitioners who are perceived as professionals will gain an advantage over other practitioners.
The primary reason for the creation of federal whistle-blower statutes was to Choose one answer. A. Create a fail-safe mechanism for reporting unethical behavior. B. Protect individuals who report unethical activities. C. Provide anonymity for individuals wishing to report unethical behavior. D. Facilitate and reward the reporting of unethical behavior.
B. Protect individuals who report unethical activities
Elin is a surety producer and a CPCU. She regularly deals with legal and accounting information. She notices that certain financial information provided by a contractor shows a deteriorating financial position. To best comply with Rule 6.1 of the Code of Professional Conduct as it concerns confidential information needed by a professional, Elin should Choose one answer. A. Suggest that a competing contractor consider merging with the client. B. Report the newest financial information to the surety. C. Counsel the client as to methods to improve the financial position. D. Do nothing as the information is proprietary.
B. Report the newest financial information to the surety.
Life insurance producer Mack is aware that his company has replaced an inferior life insurance product with a superior policy. The sales commission on the new product is lower than the commission on the policy it is replacing. He is therefore eager to sell more of the inferior products while they are available due to the higher commission. He is aware the new product is better for the insured and is faced with an ethical dilemma. Mack convinces himself that he should market the old product as being unique and one that is the customer's last chance to have the opportunity to purchase the product. Although his resolution may be wrong, Mack's decision, from an ethical decision-making standpoint, is Choose one answer. A. Rules-based. B. Situation-based. C. People-based. D. Function-based.
B. Situation-based.
By exhibiting high ethical standards when dealing with policyholders, insurance professionals might be able Choose one answer. A. To reinforce policyholder general willingness to purchase insurance. B. To earn the trust of skeptical policyholders. C. To reduce claims expenses while increasing revenue. D. To lower the cost of the insurance product.
B. To earn the trust of skeptical policyholders.
Anita is a personal lines underwriter who recently received the CPCU designation. Anita is proud of her accomplishment and is committed to fulfilling her ethical responsibilities under the Code of Professional Ethics. She has set herself a goal to complete one activity to support each of the Canons in the Code. Which one of the following activities would best fulfill Anita's obligations under Canon 5 regarding raising professional standards of the insurance profession? Choose one answer. A. Taking a continuing education course related to her job duties B. Writing a professional article for an insurance trade journal C. Serving on the head office audit team to audit branch offices D. Taking a personal development course such as yoga or auto repair
B. Writing a professional article for an insurance trade journal
As authorized by the Bylaws, adjudication of alleged violations of the Rules of Professional Conduct shall be by the __________ and the __________
Board of Ethical Inquiry, Ethics Policy Committee
Pursuant to the agreements stipulated in the application for admission to CPCU candidacy, all CPCU candidates voluntarily agree to be judged by the ethics standards prescribed by the __________
Board of Trustees
The CPCU Code of Professional Conduct applies to Choose one answer. A. Those considering starting CPCU studies but not applicants. B. All CPCUs but no one else. C. Applicants for the CPCU designation, among others. D. All insurance professionals.
C. Applicants for the CPCU designation, among others.
Doreen is a CPCU and an underwriter working for Insurance Company (IC). Crystal is one of IC's most productive agents. Doreen met with Crystal and told Crystal that she has been too lax in the risks that she has been submitting and that in the future underwriting guidelines would be enforced more strictly. Crystal said she disagreed with Doreen's assessment of the risks she wrote, and that Doreen should reconsider her position. As their meeting ended, Crystal asked Doreen what she did for fun. Doreen replied that she enjoyed going to the beach. Crystal said, "You're in luck. I'm not using my shore house this weekend. Here are the keys. Have fun!" Doreen is excited by the offer, but wonders whether it creates an ethical conflict.If Doreen uses an ethical dilemma decision-making flowchart to resolve this issue, she will Choose one answer. A. Realize that there are no ethical issues to be addressed. B. Decide she has a business conflict and not an ethical conflict. C. Determine whether application of the CPCU Code of Professional Conduct will resolve any conflict. D. Recognize that no principles would be compromised by accepting what looks to be merely a friendly gesture.
C. Determine whether application of the CPCU Code of Professional Conduct will resolve any conflict.
Jessica is a loss control specialist with an insurer. She often inspects the property and operations of insureds and makes loss control recommendations to the underwriter. Jessica's duties in these situations are best described by which one of the following? Choose one answer. A. Her duties involve the insurer and the policyholder. B. Her duties involve the policyholder and the public with which the policyholder deals. C. Her duties involve the policyholder, the public, and the insurer. D. Her duties involve the insurer and the public.
C. Her duties involve the policyholder, the public, and the insurer.
Joseph is struggling with an ethical dilemma. He does not have a firm handle on what he should do. During a recent continuing education class, Joseph was introduced to the concepts of a systematic approach to resolving ethical dilemmas. Following the process, he has identified the stakeholders and the motivations of those involved. To complete the systematic approach and come to a conclusion Joseph should now Choose one answer. A. Identify the rights of the stakeholders. B. Separate facts from feelings. C. Identify the relevant ethical issues. D. Consider only objective information.
C. Identify the relevant ethical issues.
Jaimie is a marketing representative with ABC Insurance and a CPCU. ABC has a company policy of actively encouraging all of its employees to obtain professional designations and it has a high percentage of CPCUs among its professional staff. Jaimie has been given the responsibility of establishing agency contracts with ten new brokerages in an area of the state in which ABC is not currently writing business. Unfortunately, ABC's rates in the area are not particularly competitive and brokerage owners have been asking Jaimie why they should take on another carrier with rates similar to those of the insurers they already represent. Jaimie's response is that because ABC has a high percentage of CPCUs among its staff, the company will obviously be able to provide much more knowledgeable service than its competitors. Which one of the following statements best describes how Canon 8 of the Code of Professional Conduct regarding use of the CPCU designation would apply in this situation? Choose one answer. A. Jaimie is in violation of Canon 8 because he is revealing information about the number of CPCUs in ABC's employ. B. Jaimie is in compliance with Canon 8 because he is maintaining the dignity and integrity of the CPCU designation. C. Jaimie is in violation of Canon 8 because he is making unfair comparisons between CPCUs and those without the designation. D. Jaimie is in compliance with Canon 8 because he is explaining the direct benefits of the designation to the brokerages.
C. Jaimie is in violation of Canon 8 because he is making unfair comparisons between CPCUs and those without the designation.
Mark is a newly licensed commercial insurance broker and a CPCU. He worked for ten years as a claim representative before obtaining his broker's license. While out cold-calling, Mark meets with a factory manager who is interested in obtaining a quote for the company's upcoming insurance renewal. The manager also indicates that he would like Mark to perform a loss control inspection at the premises and to review the company's current policies to evaluate whether any changes in coverage are required. Which one of the following should Mark do to best comply with his obligations under Canon 6 of the Code of Professional Conduct as it pertains to a CPCU's expertise and ability to provide the professional services required? Choose one answer. A. Inspect the premises, review the policy wordings, make initial recommendations, and then go back to discuss the account with more experienced staff. B. Prepare a quote based on the client's existing coverage, submit it to an insurer, and ask the insurer to send out a loss control inspector. C. Offer to bring a senior staff member out to complete the loss control inspection and coverage review. D. Explain to the factory manager that he is not qualified to do what is required, thank him for his time, and leave.
C. Offer to bring a senior staff member out to complete the loss control inspection and coverage review.
Hugo is a CPCU and resident vice president and regional manager of an insurance company. The state legislature is considering a bill that would alter auto coverages and require insurers to reduce rates by 25 percent. Hugo is invited to be part of a roundtable discussion on the legislation by the state public broadcasting affiliate. To best comply with Canon 7 of the Code of Professional Conduct as it relates to helping to improve the public understanding of insurance, Hugo should Choose one answer. A. Seek permission from his employer to present the position of his company. B. Obtain and present the position of the insurance trade association to which his employer belongs. C. Present objective information on the pros and cons of the legislation without taking a position. D. Present his opinion on the legislation clearly noting it is his opinion and may or may not be the position of his company.
C. Present objective information on the pros and cons of the legislation without taking a position.
A local university invites Mathilde, a CPCU, to be on a panel discussing various codes of ethics. The panel is asked to explain why continuing education is required in their professions. Mathilde's best explanation of the continuing education requirement of the CPCU designation would be Choose one answer. A. Continuing education may be required by law and professionals always comply with laws. B. Education is directly related to professional competence. C. Professional ethics require that a professional maintain competence in a complex, rapidly changing environment. D. Professional associations, such as the CPCU Society, require continuing education for membership.
C. Professional ethics require that a professional maintain competence in a complex, rapidly changing environment.
Margaret, a CPCU, is the owner of City Insurance Brokers. When one of her personal lines carriers, ABC Insurance, cancels Margaret's agency contract due to lack of sales volume, Margaret is faced with replacing the few clients she had insured with ABC with another carrier. She discovers she can find competitive quotes for most of these clients with other insurers that she represents. However, in the case of three customers, replacing their coverage will result in premium increases of several hundred dollars. Margaret knows that another brokerage in town, West End Insurance, has placed a significant volume of business with ABC Insurance. Which one of the following should Margaret do to comply with the CPCU Code of Professional Conduct? Choose one answer. A. Replace the three clients' coverage at the higher premium and say nothing. B. Provide her best quote and advise the three clients that ABC no longer writes in the area. C. Provide her best quote and tell the clients to go to West End if they wish to stay insured with ABC. D. Tell the three clients that she is unable to replace their coverage with any of her other carriers.
C. Provide her best quote and tell the clients to go to West End if they wish to stay insured with ABC.
Daiki, a CPCU, has been underwriting a difficult account and has been working with the proposed insured's risk manager. On two occasions, Daiki has received letters from the risk manager with this typed below the risk manager's signature, "Almost a CPCU." Daiki learns that the risk manager has only one more course to pass to become a CPCU. Daiki's most appropriate action would be to Choose one answer. A. Ignore the verbiage as the risk manager has only one CPCU part to pass. B. Ask the risk manager to stop adding the verbiage. C. Report the risk manager to the American Institute. D. Notify the employer of the risk manager of the practice.
C. Report the risk manager to the American Institute.
Frederik wants to publicize the fact that he is a CPCU. He examined Canon 8 of the Code of Professional Conduct, its rules and guidelines and cannot find a prohibition from using the CPCU key in an unusual way that he has in mind. To avoid violating Canon 8, Frederik's best action should be to request an opinion from Choose one answer. A. His CPCU Society chapter's ethics officer. B. An attorney. C. The Ethics Counsel of the American Institute. D. The Ethics Committee of the CPCU Society.
C. The Ethics Counsel of the American Institute.
The local CPCU Society chapter plans to sponsor a high school essay contest on "The Role of Insurance in Society." The winners will receive awards that look like football trophies, except instead of a football on top, there will be a large key imprinted with "CPCU." Which one of the following statements is true? Choose one answer. A. The organizers should have no concerns over their intended use of "CPCU" since a trophy does not constitute jewelry. B. The organizers should make their own determination as to whether the contemplated use of "CPCU" is dignified and professional. C. The organizers must first obtain explicit permission from the American Institute for the contemplated use of "CPCU." D. The organizers may proceed as long as the initials "CPCU" are no taller than one and one-quarter
C. The organizers must first obtain explicit permission from the American Institute for the contemplated use of "CPCU."
Which one of the following best describes the purpose of the Code of Professional Conduct of the American Institute for CPCU? Choose one answer. A. To outline a specific process that CPCUs can use to ensure that all of the decisions that they make are ethical B. To clarify the effect of all laws and regulations to which insurance professionals are subject in the course of their employment C. To clearly communicate the minimum standard of conduct expected for CPCUs and CPCU candidates D. To enforce ethics among insurance professionals through the use of sanctions and penalties for unethical behavior
C. To clearly communicate the minimum standard of conduct expected for CPCUs and CPCU candidates
Given an ethical dilemma regarding professional relationships, apply __________ and its associated rules to determine a resolution
Canon 6
Given an ethical dilemma concerning the public's understanding of risk management and insurance, apply __________ and its associated rule to determine a resolution
Canon 7
Given an ethical dilemma involving potential misuse of the CPCU designation and key, apply __________ and its associated rules to determine a resolution.
Canon 8
Given an ethical dilemma surrounding the integrity of the CPCU Code of Professional Conduct, apply __________ and its associated rules to determine a resolution
Canon 9
The Code consists of two kinds of standards, __________ and __________ of Professional Conduct. Whereas the __________ are general standards of an aspirational and inspirational nature, the __________ are specific standards of a mandatory and an enforceable nature. The Rules prescribe the absolute minimum level of ethical conduct required of every individual subject to the Code
Canons, Rules, Canons, Rules
The investigation of an alleged violation of the Code of Professional Conduct shall be carried out by a person or persons designated by the __________
Chairman of the Board of Ethical Inquiry
All investigations, whether upon complaint or otherwise, shall be initiated and conducted by __________
Counsel
Complaints are properly submitted to __________ after all other available remedies have been exhausted
Counsel
Which one of the following statements is correct? Choose one answer. A. An ethical insurance professional need not maintain knowledge of current regulatory issues. B. Laws have no ability to help keep competition fair. C. Adherence to ethical standards does not build consumers' trust in the insurance industry. D. A pursuit of continuing education in laws and regulations helps insurance professionals avoid allegations of impropriety.
D. A pursuit of continuing education in laws and regulations helps insurance professionals avoid allegations of impropriety.
Lloyd is a commercial property underwriter at Insurance Company (IC). Two years ago, he completed his studies and obtained the CPCU designation. Due to recent changes in workers compensation legislation in one of the states in which IC operates, the insurer has arranged for a one-day seminar to explain the changes and the impact they will have on underwriting and claim settlement. Considering Lloyd's obligations under the Code of Professional Conduct (the Code), which one of the following statements is correct? Choose one answer. A. Lloyd is required to complete any training made available by his employer. B. Because Lloyd has his CPCU, further training is considered unnecessary. C. The Code requires Lloyd to remain current on all changes in insurance legislation. D. Because the seminar is not directly related to Lloyd's job, he is not obliged to attend.
D. Because the seminar is not directly related to Lloyd's job, he is not obliged to attend.
Which one of the following statements is correct? Choose one answer. A. Social responsibility expectations are in conflict with an insurer's goals of long-term survival and sustained growth. B. In the modern world, attention to social responsibility has become a relatively low priority for most commercial businesses. C. The primary purpose of insurance continues to be to generate profits for owners and shareholders. D. Many insurance products have evolved from the identification of a social need and the industry's societal responsibility to meet that need.
D. Many insurance products have evolved from the identification of a social need and the industry's societal responsibility to meet that need.
CPCU Ida's agency is very close to qualifying for a European trip that is an insurance company sales incentive but only has one month to qualify. As sales manager, Ida would be awarded the trip. To best comply with Rule 3.2 of the Code of Professional Conduct concerning financial gain and personal benefit, Ida should Choose one answer. A. Encourage producers to place business with the insurance company awarding the trip. B. Reward producers who place business with the insurance company awarding the trip. C. Require producers to place business with the insurance company awarding the trip unless she gives an exception. D. Require producers to place business with the most appropriate insurer to meet customer needs.
D. Require producers to place business with the most appropriate insurer to meet customer needs.
The American Institute's Board of Ethical Inquiry (BEI) has found that a complaint brought before it against Zeke, a CPCU, merits disciplinary action. The BEI may administer all of the following penalties against Zeke, EXCEPT: Choose one answer. A. Private admonitions, requesting that Zeke cease and desist B. Reprimands in the form of informal rebukes given limited publication C. Revocation or suspension of the privilege to use the CPCU designation D. Requiring payment of restitution to those harmed by Zeke's conduct
D. Requiring payment of restitution to those harmed by Zeke's conduct
Emily is a producer on a difficult risk. She has gathered extensive information regarding an insurance applicant. In order for Emily to meet her professional responsibilities to the insurer, Emily should Choose one answer. A. Recommend coverage that is the most profitable for the insurer. B. Recognize a mutual interest and do what is best for the insurer and herself. C. Submit to the insurer only the information that favors lower premiums. D. Review the applicant's risk exposure carefully to place appropriate coverage.
D. Review the applicant's risk exposure carefully to place appropriate coverage.
Julieta has been asked to serve on a legislative committee for her state to examine and suggest changes to the portions of state law relative to compensation for victims of auto accidents. As a CPCU, Julieta is considering the implication of Rule 4.2 of the Code of Professional Conduct concerning improvement of insurance mechanisms if she accepts the invitation. Which one of the following statements would indicate the best reason to accept the invitation without violating Rule 4.2? Choose one answer. A. She can suggest changes that improve the profitability of her employer. B. She can suggest changes so that the injured victim would be able to claim and retain more damages from an accident. C. She can suggest changes so that a party with greater financial resources bears the cost of auto injuries. D. She can suggest changes that improve efficiency in payment at a lower cost to the public.
D. She can suggest changes that improve efficiency in payment at a lower cost to the public.
Teresa is a commercial lines producer and a CPCU. The brokerage has a policy that all producers should work to obtain the CPCU designation. One of Teresa's co-workers, Chris, has been struggling unsuccessfully with CPCU courses for years. He has complained to Teresa several times that the material is too difficult. In addition, he has not been meeting his sales objectives for the past two years. When the brokerage fires Chris, he soon gets a job with a competing brokerage. When visiting one of the brokerage's larger accounts, Teresa sees Chris' business card from his new employer on the client's desk. The card includes the CPCU designation and key. Teresa is certain that Chris has not earned the designation. Which one of the following best describes Teresa's obligations under the Code of Professional Conduct? Choose one answer. A. Teresa is not obliged to take any action because Chris no longer works for her employer. B. Teresa is obliged to inform her employer that Chris is targeting the brokerage's accounts. C. Teresa is obliged to inform Chris' new employer that he does not have the CPCU designation. D. Teresa is obliged to report to the AICPCU that Chris is using the designation.
D. Teresa is obliged to report to the AICPCU that Chris is using the designation.
An insurance customer has alleged that Jake, who is a producer and a CPCU, has violated the Code of Professional Conduct. As a CPCU who is subject to a formal disciplinary proceeding before a Hearing Panel of the Board of Ethical Inquiry, Jake is entitled Choose one answer. A. To a hearing before a jury of his or her professional peers. B. To the same due process rights as a criminal defendant. C. To a hearing before the local court of common pleas. D. To be heard in person and be represented by counsel.
D. To be heard in person and be represented by counsel.
George is a CPCU who owns a commercial insurance agency. George met with Horace, the owner of a growing local company that is seeking to move all of its coverages and had asked George for quotes. Horace mentioned to George that Horace was the chairperson of a charitable fund drive, and a $20,000 donation from George's agency "would go a long way toward helping me to assess my company's insurance situation." George understands this statement to mean that if he makes the donation, Horace will buy his insurance from George. George feels Horace's remark is akin to a bribe, but he would very much like to get Horace's business and the charity is a good one. George wonders whether he has an ethical dilemma. George should consider Choose one answer. A. That what Horace proposes might be the custom in Horace's industry and therefore ethically acceptable. B. That he offers good insurance products at good prices such that no one would be cheated. C. That making the donation creates a winning situation for all of the stakeholders in the scenario. D. Whether making the donation creates the appearance of impropriety.
D. Whether making the donation creates the appearance of impropriety.
The Chairperson of the Board of Ethical Inquiry shall be the __________ of The Institutes, who shall be the administrative head of the Board and shall preside at all meetings of the Board, but the chairperson may not participate in the deliberations of the Board in its capacity as a disciplinary tribunal
Ethics Counsel
Enforceable components of the CPCU Code of Professional Conduct are the
Guidelines and Rules.
In accordance with Articles __________ and __________ of the Bylaws of The Institutes, the Board of Trustees has established educational, experience, and ethics standards that must be met by every individual who seeks the privilege of being designated a Chartered Property Casualty Underwriter (CPCU). The ethical standards are set forth explicitly in the Code of Professional Conduct
I and IV
In the normal course of business, CPCUs may have access to a great deal of confidential information. Insurance files often contain information on customers' health, income and other financial information, and reputation. Insurers also accumulate confidential and proprietary information on businesses, such as financial reports, business plans, products, hazards, and trade secrets
In the normal course of business, CPCUs may have access to a great deal of confidential information. Insurance files often contain information on customers' health, income and other financial information, and reputation. Insurers also accumulate confidential and proprietary information on businesses, such as financial reports, business plans, products, hazards, and trade secrets
The Rules of Professional Conduct are also enforceable and binding upon all CPCUs whose designations are conferred after __________. However, by resolution of the Board of Trustees, the earliest enforcement date shall be deferred for such CPCUs until __________
July 1976, 1 July 1977
Composition of members of The Board of Ethical Inquiry
One member shall be the Ethics Counsel, a staff officer of The Institutes other than the President, who shall serve ex officio as nonvoting chairperson. The other seven (7) members shall not be full-time employees of The Institutes or the CPCU Society
Deals with the treatment of confidential information.
Rule 6.1
Requires CPCUs to understand the legal limitations of their profession and to act accordingly. It states that CPCUs should not engage in the practice of law or give the appearance of doing so, unless they are admitted to the bar or otherwise legally qualified to practice law
Rule 6.2
Any CPCU passing professional judgment on an insurance or risk management situation should exercise independent thought while also acknowledging any limitations, legal or otherwise, to his or her expertise. Further, CPCUs should be willing to seek advice from other professionals, both inside and outside the insurance industry
Rule 6.3
Obligates CPCUs to accurately represent their abilities to provide quality professional services
Rule 6.3
Obligates insurance professionals not only to inform the public about risk and insurance, but also to keep current on any changing developments in the industry. Such developments could include new legislation or a new regulation that affects how consumers make decisions regarding their insurance needs. They can also include information on current trends and emerging issues affecting insurance products or risk management.
Rule 7.1
The public should be informed of the limitations of the insurance mechanism and the extent to which insurance can and cannot meet overall risk management needs. This includes how deductibles and exclusions may apply to certain loss situations
Rule 7.1
This is the only rule in the CPCU Code of Professional Conduct that includes specific guidelines. Failure to adhere to these guidelines constitutes a rule violation. The guidelines are designed to assist CPCUs in the dignified and professional use of the designation and key. They specify how the CPCU designation may be used on business cards and stationery and in advertising and office listings
Rule 8.1
Obligates CPCUs to avoid any actions that would lead others to believe they are representing The Institutes in any official capacity unless the CPCU has been authorized by The Institutes to do so. Such representations could appear in articles, presentations, speeches, or any other correspondence. Only those who are officers, staff, or members of the Board of Trustees of The Institutes are authorized to represent or speak on its behalf
Rule 8.4
CPCUs should neither initiate nor support the candidacy of any individual who engages in unethical business practices that would violate the code's standards. CPCUs are obligated to support only those CPCU candidates who exemplify the high ethical standards described in the canons and their associated rules
Rule 9.1
Encourages CPCUs to report code violations by bringing such violations to the prompt attention of the appropriate parties for review. This does not mean that CPCUs are required to become investigators, make judgments, or submit reports regarding the actions of other insurance professionals. Instead, it simply means that CPCUs are generally encouraged, but not required, to voluntarily report information on suspected violations
Rule 9.2
When deciding whether to report an alleged code violation, an individual may be concerned about the negative consequences that could result from making the report. __________ addresses this concern by prohibiting any CPCU from retaliating against an individual who reports alleged code violations. This rule may help to alleviate concerns a CPCU may have in doing his or her part to uphold the integrity of the code
Rule 9.3
Under __________ CPCUs are ethically required to report any use of the CPCU designation by an individual who is not entitled to use it. Note that __________ differs from __________ in that it requires CPCUs to report such infractions, rather than simply encouraging them to do so
Rule 9.4, Rule 9.4, Rule 9.2
Deal with misrepresentation and unfair comparison based on attainment of the CPCU designation. CPCUs should not assert that, based solely on attainment of the CPCU designation, they have skills and capabilities greater than those demonstrated by completing the CPCU program of study. CPCUs also should avoid making any unfair comparisons between insurance professionals who have earned the designation and those who have not
Rules 8.2 and 8.3
All members of __________ shall be CPCUs, and together they shall constitute, as nearly as is practical, a representative cross section of the occupational backgrounds and other pertinent characteristics of all CPCUs
The Board of Ethical Inquiry
Shall be responsible for implementing established and approved ethics policy
The Board of Ethical Inquiry
Shall consist of eight (8) members appointed by the President of The Institutes subject to the advice and consent of the Ethics Policy Committee
The Board of Ethical Inquiry
The principal functions of __________ shall be to certify that CPCU candidates have met all ethics requirements, issue opinions to CPCUs and CPCU candidates who request assistance in interpreting or applying the Code of Professional Conduct, instigate independent investigations of the facts in cases involving alleged Rule violations under the Code, and serve as the tribunal to hear and decide cases involving alleged Rule violations
The Board of Ethical Inquiry
__________ shall either approve, disapprove, or modify the recommendation of the Board of Ethical Inquiry within thirty days after the submission of the record by Counsel
The Committee (Ethics Policy Committee)
__________ shall have responsibility for reviewing matters of policy associated with all Institute ethics activities, making recommendations to the Executive Committee and the Board of Trustees, and providing for liaison with the CPCU Society on ethical policy considerations
The Ethics Policy Committee
__________ shall promulgate the specific disciplinary procedures and penalties to be used in enforcing the Code of Professional Conduct of The Institutes and shall have the authority to approve such periodic changes in the disciplinary procedures and penalties as may be necessary or desirable
The Ethics Policy Committee
Information regarding an alleged violation that is conveyed by phone or through other media and anonymous complaints may be investigated __________ in consultation with the Senior Management Team of The Institutes to determine whether sufficient information exists upon which to base a complaint. If, after the investigation described in paragraph B., it is decided to proceed with formal disciplinary proceedings, a copy of the complaint shall be furnished by __________ to the person or persons against whom the complaint is lodged
at the discretion of Counsel, Counsel
The Sarbanes-Oxley federal law requires that publicly traded companies identify principal ethics officers, create anonymous hotlines for reporting unethical behavior, and
establish codes of ethics.
In those disciplinary matters that must be reviewed by, or which are appealed to, the Ethics Policy Committee ("the Committee") after the The Hearing Panel has made an initial decision, Counsel shall submit the record, including the decision of the Board of Ethical Inquiry, to the Chairperson of the Committee by mail. The respondent will be conclusively deemed to __________ of the Board of Ethical Inquiry unless the respondent had filed an answer upon service of the initial charges and notice of the institution of formal disciplinary proceedings before a Hearing Panel of the Board of Ethical Inquiry, as provided above
have waived all objections to the findings and recommendations
A CPCU convicted by verdict, guilty plea, or plea of nolo contendere of any crime that violates the Rules of Professional Conduct __________ to use the CPCU designation
immediately loses the right
Maintaining high ethical standards is best associated with
knowledge of law and regulations
Complaints alleging a violation of the CPCU Code of Professional Conduct shall be submitted in writing by U.S. Mail, facsimile, or e-mail, provided the allegation contains the complaining party's __________, __________, and __________
name, address, and telephone number
Ethical behavior is based on
reasoned consideration of all issues surrounding a conflict
Formal disciplinary proceedings before a Hearing Panel of the Board of Ethical Inquiry shall be commenced by setting forth the specific charges of misconduct. A copy of such charges shall be served on the __________
respondent and/or the respondent's attorney
The integrity of the CPCU Code of Professional Conduct is maintained through the enforcement of disciplinary rules and procedures. The code applies to all CPCUs as well as applicants, candidates, and designees. However, disciplinary procedures for alleged violations of the code differ depending on the individual's __________
status
Whenever Counsel determines that an applicant for the CPCU program may have violated the Code of Professional Conduct, Counsel shall recommend, after investigation and in accord with the procedures herein, whether __________
such applicant shall be approved or rejected
If the Board of Ethical Inquiry determines that a complaint merits disciplinary action, it may impose or recommend, as appropriate, any penalty hereinafter described, provided that the severity of the penalty imposed shall be commensurate with __________. The Board of Ethical Inquiry may also consider all the circumstances surrounding the commission of any offense and the likelihood that the offender has been rehabilitated. All penalties recommended by the Board of Ethical Inquiry must be reviewed, before becoming effective, by the __________ and approved or modified as appropriate
the severity of the offense committed, Ethics Policy Committee
Voting members of the Board of Ethical Inquiry shall be appointed for a term of __________, with the possibility of appointment for a second term of __________, after which members are __________
three years, three years, not eligible for any additional appointment
CPCUs are required to maintain dignity and honor in all of their business relationships and transactions. Because insurance transactions involve an intangible promise, a strong element of __________ in the risk management and insurance professionals involved in those transactions is required. Therefore, risk and insurance professionals must establish and maintain a reputation for __________ through a commitment to honest and transparent business dealings
trust, trustworthiness
Morality is
universal and basic to human relationships
