Ethics: An Introduction

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About Principles and Rules

Principles and Rules

Principles and Rules are the foundation of personal ethics, professional conduct, and codes of ethics.

Principles are statements expressing, in general terms, the ethical and professional ideals that agents are expected to display in their professional activities. As such, the principles are aspirations, as they are intended to provide a source of guidance.

Rules provide practical guidelines derived from tenets embodied in principles. As such, rules describe the standards of ethical and professionally responsible conduct expected of financial professionals in particular situations.

Dictionaries define a Principle as an accepted or professed rule of action or conduct, such as a person of good moral and ethical principle. It is a fundamental, primary, or general law or truth from which others are derived as in the principles of modern physics. A principle is a fundamental doctrine or tenet and a distinctive ruling opinion. Principles are a personal or specific basis for conduct or management and are a guiding sense of the requirements and obligations of right conduct.

Rules are principles or regulations governing conduct, action, procedure, arrangement, etc. such as the rules of chess. Rules are the code of regulations observed by a religious order or congregation, such as the Franciscan order. Rules are the customary or normal condition, occurrence, manner, practice, quality, etc. as in the rule rather than the exception.

The more general tenets and guidelines are referred to as the principles. They express for us, as professionals, what we know are our responsibilities to our current clients, future clients, colleagues, our and other's employers, and to the public as a whole. In specific, for our course, they apply to all agents. They provide guidance for all of us as we provide professional analysis and solution services.

Ethics and Values

In approaching the subject of ethics, it is a broad area containing both general premises and tenets as well as more specific pieces that come into play as agents encounter individual situations while working with clients.

Values define what we think is right, good, fair, and just. They are our fundamental beliefs or principles. Ethics are behaviors and guide people in how to act in accordance with standards and values.

It's not the company's place to tell us what our values ought to be; they come with us when we enter the workplace. But it is the company's responsibility to set behavioral standards and its obligation to train and inform employees of those standards.

Intrinsic moral values cannot be legislated; however, ethical behavior can be required of licensed professions. This takes the form of consumer protection laws.

What about Trust?

There is a high level of trust placed in the agent by consumers and many of their decisions are made and based solely on the statements and representations made by the insurance agent. Financial professionals have a distinct obligation of fiduciary responsibility towards the people they represent in the insurance industry.

This trust placed in the agent reflects the consumer's lack of knowledge in the areas of insurance products and practices. The agent, on the other hand, has the knowledge and expertise to assist the consumer in making decisions in these fields and should not abuse their superior position. In order for the insurance industry to continue to enjoy this trust relationship with the consumer, it is necessary for all agents (new and veteran) to periodically re-dedicate themselves to upholding this hard won trust. Only through the careful nurturing of this relationship by all agents within the insurance industry will insurance, as an institution, continue to prosper and grow.

Some have said that trust means to build confidence through communication between members of a team. Trust is regarded as one most important ingredients of integrity. Is trust asked for or is it earned? This may be the big question, but it is most effectively answered, for an agent, after weeks or months of sales experience. Some suggest that when an agent tries to convince a client to trust them, the agent's company, or the product or service that they are offering, the agent has taken the first step to losing the sale. The customer may see the agent, company, or product differently. Trust is earned by meeting the client at his or her perspective and point of need. Their point of need is often different than what the agent may think it is.

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Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and InsuranceEthics101.com, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.