CPCU - Ethics
How can a company act unethically?
A good example is deceptive or misleading marketing or advertising campaigns
Everyday choices made regarding dress or speech are more a reflection of a person's personality; ethical choices reflect a person's
Character
The Moral Rights approach to ethics is based upon:
Developing an understanding of and healthy respect for the rights of others as individuals
Silver Rule only asks you to do one thing. What is that?
Do no harm
A company is nothing but a collection of individual actors
Promoting and preserving a standard of ethical integrity requires the active participation of each employee.
The Moral Rights philosophy argues each human being is born with all of the following rights, EXCEPT:
Right to Universal Health Care
One of the key character traits
Trust
Individuals place high value
on behaviors relating to accumulation of wealth, physical appearance, and other behaviors not related at all to ethical behavior.
Silver Rule
only asks you to do one thing—don't cause any harm to others
The company that forms a bond of trust with its employees and with its customers
will ultimately gain customer loyalty and, with that, should be able to gain market share and increase the opportunities for its employees to be successful.
By acting ethically
you created a bond of trust between you, the client you treated correctly, and any friends or acquaintances that those clients might recommend
By acting ethically
you have given them no reason to believe that you would act in any way that would not be for their benefit.
To best serve your customers
you must keep current in your field, and avoid taking on tasks for which you lack competence. You must remain independent and objective in your judgment
What comment followed this remark by Aleksandr Solzhenitsyn, a famous Russian dissident? "I've lived my life in a society where there was no rule of law. And that's a terrible existence."
"But a society where the rule of law is the only standard of ethical behavior is equally bad."
P T Barnum said:
"No man can be dishonest without soon being found out and when his lack of principle is discovered, nearly every avenue to success is closed... "
de rigueur
(In English language usage, it means, "necessary according to etiquette, protocol or fashion.")
Ethical
Behavior consistent with agreed principles of correct moral conduct.
Moral Rights is most often associated with which of the following?
Each individual is endowed with the right to think for him or herself and to make decisions as free thinking human beings
Justice is most often associated with which of the following?
Equal treatment of everyone
Utilitarianism is most often associated with which of the following?
Greatest amount of good to occur for the greatest number of people
Individualism is most often associated with which of the following?
Greatest good for the individual over the long term
Golden Rule Test
If your company's products were being sold to you, would you buy them? Does it deliver its policies promptly to the customers? Do those policies accurately reflect the coverages that your customer bought from you? Does your company pay claims promptly? Does it respond to customer concerns and questions promptly? Does it provide the level of overall service that it promised before the customer purchased the product?
4 stages of the management continuum
In stage 1, the manager's only responsibility is to the owners and stockholders of the company. Achieving the bottom-line financial goals of the company is the primary objective in this stage. In stage 2, the manager's responsibility broadens. In addition to being responsible to the company owners and stockholders, the manager is responsible for establishing and maintaining a good relationship with the company's customers and employees. To a certain extent the process of establishing and maintaining these relationships must be built upon exhibiting characteristics such as fairness, justice, trust, honesty, and must be based upon establishing and maintaining open and honest communications with both customers and employees. In stage 3, in addition to the responsibilities established in stages 1 and 2, managers take on an ethical responsibility to honor commitments to business partners, contractors, vendors, and others to whom the company has made commitments, whether written or not. In stage 4, managers also become responsible to the external community. This commitment is referred to as corporate responsibility or corporate citizenship. In this stage, managers and employees become involved in local activities in order to help improve the quality of life in the community by improving schools, parks, and even public safety. If you take a hard look at what has been laid out in the manager's continuum, you can see the development of an ethical foundation for a business that on the first stage is financially driven. The end result in stage 4 is a company that is proactive in doing what is good for its employees, owners, customers, and the community around it. Taking such a proactive approach to doing good for the many is a foundation principle of many of the philosophies that we discussed earlier in the course.
What does "it's not the harness but the horses that pull the wagon" mean?
Individual actions create the ethical climate in a company.
a philosophy that postulates that the highest ethical standard can be achieved by doing what is the greatest good for the "individual" over the long term
Individualism
Consistency between values and ethics is a matter of
Integrity
The Golden Rule:
It is asking you to take the initiative to do the greatest good and act in the most ethical manner to others. It's asking you to show the same respect for the rights and feelings of others as you would like shown to you.
Know your company well
Know its mission statement, its vision statement, and its corporate values statement. If you have a great story to tell regarding your company's high ethical standards, by all means add that story to your sales presentation
Trust
The assured reliance on the character, ability, strength or truth of someone or something.
Among the moral rights philosophy
The right to privacy, truth, justice, freedom from injury or harm, and many other individual rights
6 key principals that comprise the body of more than 144 separate specific criteria that are required to satisfy the association's accepted ethical standard:
To conduct business according to high standards of honesty and fairness and to render that service to its customers which, in the same circumstances, it would apply to or demand for itself. To provide competent and customer-focused sales and service. To engage in active and fair competition. To provide advertising and sales materials that are clear as to purpose and honest and fair as to content. To provide for fair and expeditious handling of customer complaints and disputes. To maintain a system of supervision and review that is reasonably designed to achieve compliance with these Principles of Ethical Market Conduct. Procedurally, companies must first submit to a self-audit, applying all of the IMSA standards. Then a company must subject itself to a third-party assessment by a qualified and accredited third-party assessor.
an ethical philosophy that postulates that we should always choose the action that will cause the greatest amount of good for the greatest number of people
Utilitarianism
Golden Rule
a strong, proactive universal standard that calls for you to do what is right and good for others
A company develops trust by
assuring its customers as well as its employees, that it will meet its commitments, that it does have an established set of corporate values, and that it cares or is continuously working for the good of its customers and its employees
Most people base their conviction about what is right and wrong
based on religious beliefs, cultural roots, family background, personal experiences, laws, organizational values, professional norms, and political habits.
All of the following are factors in establishing a relationship of trust with your clients, EXCEPT:
believing there is a sucker born every minute
Acting on your mentor's suggestion that you sell a certain form of insurance to one of your clients without questioning whether the insurance is required by your client may be an example of which of the following common patterns of reaction?
blind faith
When it comes to ethics we have the opportunity to
create our own perception and process
When the motivation for behavior is self-interest
decision-making is reduced to risk-reward calculations
The Silver Rule
doesn't require the universal ethical investment as the Golden Rule
Moral rights philosophy
each individual is endowed with the right to think for himself or herself and to make decisions as a free thinking human being. The moral rights philosophy holds that the decisions and choices made by each individual are deserving of (and should be) respected
The overriding theme of the Justice View is to treat everyone equally, meaning ______________.
equally good, not equally bad.
Of primary importance to an industry, determined to improve its performance, is the identification and ___________________.
ethical management of conflicts of interest
In the absence of compelling justification, in the pursuit of ethical decision-making, we _________________________.
expect respect and must be willing to extend respect for others' goals and activities.
Ethical standards
foundation in history, tradition, and philosophical concepts
Suggesting the same life coverage for each person between 20 and 25 or the same annuity products for each person between 30 and 35 may be an example of which common pattern of reaction?
habit
Our concept of "rights"
has been transformed from something in contrast to "wrong" to the concept of privilege and entitlement
Reinforcing corporate or industry ethics
helps us determine the ethical action when there are more than one apparent "right" actions, depending on the perspective of the actor.
Even if you act on your own with the highest of ethical standards,
if the company or the industry that you represent is not perceived as trustworthy or ethical, it reflects on you and your ability to perform your job.
Resolving ethical dilemmas requires weighing the alternatives and deciding _________________________
if there is a way to achieve some or even all of the ethical objectives without violating some other ethical principle
The justice view
in order to act ethically you need to treat everyone in the same way
Which term is used to describe a gut feeling, when you can tell something feels right or wrong, ethical or unethical, legal or illegal?
intuition
Creating and maintaining public trust and confidence in the insurance industry
is the responsibility of every employee of each company in the industry
The duty of a profession
is to fulfill a definite service within society that requires a high degree of skill or knowledge.
A company develops trust by assuring all of the following, EXCEPT:
it is continuously working for the good of regulators
To (Golden Rule) become more of a mandate
it must be enforced by a fear of private dishonor, public shame, or divine retribution. Where none of these fears provides sufficient guidance, civil and criminal penalties can provide the necessary deterrent
When everyone determines his or her own standards, there are no standards. What human tendency magnifies this dilemma?
judging oneself according to one's own GOOD INTENTIONS while judging others by their WORST ACTIONS
Ethics refers to principles that define behavior as all of the following, EXCEPT:
left
Unethical behavior can be
legal
All of the following are philosophical approaches to ethics, EXCEPT:
legal rule
Ethical dilemmas
may lead to unethical choices. - We tend to do what's most convenient. We tend to do what we must to win. We rationalize our choices with relativism, by deciding what's right in the moment according to the circumstances.
If the risks from ethical behavior are high, or the risks from unethical behavior are low and the reward is high
moral principles succumb to expediency
Common values generate
moral standards in the form of specific right and wrong
an individual, in this case a company leader or manager
must have a well-developed ethical value system
Self-interest restraint
not doing what you have the power to do or what you have the right to do or not doing what you want to do
As a rule, values have little to do with ethics. Individuals often place high value on all of the following, EXCEPT:
political party affiliation
An insurance professional honors their commitments by doing all of the following, EXCEPT:
providing the name of a trial lawyer in the event of challenged claims
Reasoning critically involves much more than just an overt, animal instinct reaction to the external events around us. Reasoning critically requires that we use our mind's ability to process information in a logical, organized way to reach conclusions that will allow us to make thought-based, rather than reaction-based, decisions. This involves which of the following?
questioning, rather than simply accepting
In general, it is our ability to _______, in other words to think beyond a surface level that distinguishes us from the plants and animals with which we share this earth
reason critically
Ethics
refers to principles that define behavior as right, good and proper
Values
relate to how an individual determines his or her own behavior, whereas ethics relate to the broader societal definition of moral conduct
All of the following are philosophical approaches to ethics, EXCEPT:
religion
Resolving ethical dilemmas
requires weighing the alternatives and deciding if there is a way to achieve some or, even all, of the ethical objectives without violating some other ethical principle.
Ethical dilemmas are situations that set ethical principles, rules or objectives in opposition. Quite often, however, if _______ is removed from the discussion, the ethical decision is more apparent.
self interest
Our responsibilities to customers
serving their best interest, never misrepresenting a product or service, never misleading the customer, and protecting the privacy of our confidences. Avoid over promising and under delivering
Ethical dilemmas are situations that ____________________.
set ethical principles, rules or objectives in opposition
Ethical dilemmas
situations that set ethical principles, rules, or objectives in opposition
Situational ethics is the term for
social behavior that allows people to choose to deal with dilemmas based on what's right at the moment
It is in the performance of this service
that the insurance professional earns the trust of the public
The ability to reason critically includes all of the following, EXCEPT
the ability to use judgment of facts and reach logical conclusions EXCEPT WHEN those conclusions differ significantly from our own basic beliefs
Moral principles or practices arise out of the desire to avoid
the chaos of unrestrained personal behavior at the expense of the social order
Many people form their opinion about what is right and wrong based on all of the following, EXCEPT:
the instruction book that comes at birth
In today's world
the integrity and reputation that your company has can be the difference between a sale made and a sale lost
If a company does not have leaders and managers who are capable of making consistent, well-thought-out and ethical decisions
the possibility exists that its employees will act in a similar fashion and the company will develop an unfavorable ethical reputation
If the manager does not have a well-defined and developed ethical value system
then the decisions he or she makes will be inconsistent, and perhaps ethically unsound.
if managers totally concentrate on building a solid ethical foundation without paying equal attention to those activities aimed at achieving the bottom line
then you would have a well-respected company that would eventually become financially insolvent.
The Golden Rule requires individuals
to admit mistakes quickly, to compensate individuals for the harm caused, and to make a firm purpose of amendment; just like you would want to be treated in similar circumstances
Employees at all levels work on a single objective
to compete in a market producing and servicing a product that meets the needs of customers
the manager needs to take whatever actions are necessary to achieve the company's bottom line goals and objectives. With such a single-minded goal, the actions taken could be ethical or unethical
to the company, if this were the manager's only concentration, as long as the bottom line was achieved, it wouldn't matter if the company was perceived as ethical or unethical.
While transparency in every step of your contact with customers is essential
transparency and accountability at all levels within the company is vital
One man's religion
trumps another man's right to live.
________ is one of the traits of ethical behavior.
trust
Core standards:
trustworthiness, respect, responsibility, and fairness which honor the dignity and autonomy of each person, steeling one against the urge to impose individual values in areas of legitimate disagreement
Ethical standards must be
universal, coexisting, and prevailing over individual values.
As a rule,
values have little to do with ethics.
Insurance Marketplace Standards Association (IMSA)
was created to "strengthen trust and confidence in the life insurance industry by requiring member companies to demonstrate commitment to high, ethical marketplace standards."
There is one characteristic that we share:
we all choose goals and pursue them
In the absence of compelling justification
we expect respect and must be willing to extend respect for others' goals and activities
Values impact ethics
when they pertain to individual beliefs about what is right and wrong
Managers who possess a well-defined ethical value system
will make well-thought-out, fair, and ultimately just decisions when faced with an ethical dilemma
