ETHICS

DEFINITIONS IN THE REAL WORLD

 Eth'ics (eth'iks) n. pl. (1) the principles of honor and morality.  (2)  accepted rules of conduct.  (3)  the moral principles of an individual. ---eth'ic, adj. pertinent to morals.

The New American Webster Dictionary

What are ethics?  Who determines what is or is not ethical behavior?  Must religious beliefs be a part of ethical behavior?  Is it possible to make your living in commission sales and still be ethical?  Perhaps more to the point, is it possible to make a GOOD living in commission sales and still be ethical?

  While the study of ethics is actually a complex matter with many shades of right and wrong, basically ethics is about the meaning of life.  It is the abstract view of what is right and what is wrong.  There are few absolutes and many varied definitions.

  Ethics began as society's code of unwritten rules.  From the time that humans began living together, such codes of unwritten rules were necessary simply to survive.  These rules established the way in which others were to be treated. 

  For centuries, societies have argued over what is ethical or moral.  It was during the fifth century B.C. in Greece that the philosopher Socrates gave ethics its formal beginning.  The word ethics comes from the Greek word ethos, which means "character."

  Ethics involved the questioning of why certain things were done or thought.  Socrates' student, Plato and later Plato's student, Aristotle, further developed Socrates' philosophy of ethics.  Some say that their thoughts on ethics was so profound and complete that nothing new has been said since Plato or Aristotle on this subject.  We will explore the role ethics plays as it relates to the insurance field and to personal actions in general.

 In the sixties, two major movements swept America: civil rights and antiwar sentiments.  Though primarily lead by our youth, they were backed by the majority of our mainline churches and other organized groups.

  Who can forget the images we saw of Martin Luther King, groups of protesters, and numerous conflicting views brought into our lives.  For many people, this meant a new look at what we must perceive as right and wrong.

  Although the seventies saw an almost immediate decline in the revolution for change that does not mean that we have been unaware of what is around us.  Every day we are faced with starvation in many countries (some of it even in our own), energy problems, conflicts over environmental issues (jobs versus nature), inflation, run-a-way government spending and waste, high crime and drug problems, plus many more issues that affect our lives on a daily basis.

  Much of the issues that America and her citizens have wrestled with are basically related to one issue: what is the right thing to do?  This simple question often has multiple answers.

  As insurance representatives, we do not have the answers to the big problems, but we are often a mirror of what is going on in our neighborhoods.  If, as individuals, we are surrounded by people who are primarily concerned with themselves, then it is likely that we will have that same attitude.  Therefore, if the agency in which we were trained stresses SALES, SALES, SALES without any other input, it is likely that we will loose sight of the role that ethics should play.  When ethical behavior is not deemed important by our immediate peers, it is not surprising that problems eventually materialize.

  Setting down our priorities determines our goals in life.  Ethics help us set goals that will bring about pride in ourselves and our achievements.  Regardless of our personal circumstances, it is always possible to have a moral code (a code of ethics).  Even those in dire circumstances have reported this.  Viktor Frankl, author of Man's Search For Meaning, discovered that even in the brutal confines of Auschwitz, a concentration camp, people could still choose to have a moral basis to their life.

  It might be said that ethics are a recipe for living.  Our code of ethics gives each of us our personal rules and values, which determines the choices we make each day of our lives.  These choices affect not only ourselves; they affect everyone around us.  Some types of ethics tell us what NOT to do (it is wrong to steal, so we must not do so).  Others tell us what we OUGHT to do (be kind to animals).  In addition, there are those ethics or morals that actually take us beyond the basics of moral obligations.  Mary Mahowald, a medical ethicist at the University of Chicago, calls this added ethical stand virtues.  Virtues might be referred to as going beyond the call of duty.  It may also be referred to as moral excellence.  Such moral excellence would include those who have no legal or moral duty to another, but goes to extremes to help them anyway.  It refers to the person who gives their life for a stranger or goes to other countries to work for people they do not know, even though there will be no financial rewards at all.  Virtue is going beyond what we are obligated to do.

  Ethics is never a separate part of our lives.  It is part of everything we do and everything we say.  Ethics determine how we treat those we know and how we treat strangers.  Ethics determine our actions in financial and public matters.  Ethics belong in every profession and are especially needed in some.  Because ethics, as a subject, is so broad and complex, it may sometimes be divided into sections such as personal ethics, religious ethics, legal ethics, professional ethics, medical ethics and so forth.  Ethical neutrality is not possible.  Rather, it seems to be a way of avoiding some issues.

  In today's lawsuit prone society, the wise insurance agent or brokerage will make a point of following state regulations, but ethics actually goes beyond what is simply mandated by state or federal governments.  Ethics define WHO we are.  A man who tells constant lies is known to others as a "liar" (although studies show that 90 percent of us lie regularly).  A man who steals is known to others as a "thief".  An insurance agent who is unethical will also earn a reputation for such.

  It has been said that legal authorities may be able to mandate behavior, but not ethics.  Technically, this is probably correct.  A person who would like to steal may not do so because of the consequences such behavior would bring about.  Therefore, his behavior is controlled, but his ethics are not.  Although he does not steal, he would still like to.

  Controlling a person's behavior may, however, eventually lead them to an understanding of ethical behavior.  It is not unusual for an individual to become the person they pretend to be.  A person who acts ethically, even if they do not desire to be, may eventually soak in the ethical behavior and adopt some of that potential.  In fact, since morality is about the way we live, we do learn it over our entire lifetime.  To think that a person who is not ethical today will never be ethical is simply wrong.  In fact, it could go the other way as well.  The person who is behaving ethically today may not do so tomorrow.  Even so, it is true that most of our ethical behavior is learned during childhood and adolescence.

  Children learn from what they see and hear.  Children, like animals, tend to be very good at seeing adults as they really are.  Children also tend to imitate the behavior they see, especially if it is coming from the adults that are close to them, such as parents.  As a result, parents who set good moral or ethical examples are teaching their children to do the same.  Unfortunately, the reverse is also true.  In homes where prejudice, racism, sexism and other immoral codes are practiced by the parents, children from those homes are very likely to act in the same manner.  Children learn from what they see, good or bad.  We have all heard adults say "Do as I say, not as I do."  The chances are, however, that the children will do as they do.

  Many of Americans at least partially arrive at their code of ethics through their religion.  In fact, the Bible sets down many prescriptions for ethical behavior.  The Bible is probably the best-known source of sound ethical advice.  Even so, not all have agreed with the concepts stated there.  Karl Marx, the father of communism, called religion the "opiate of the masses."  Even Sigmund Freud, the father of modern psychology, regarded organized religion as institutional "wish-fulfillment."

  As we stated, moral or ethical conduct is continually learned.  Susan Neiburg Terkel reported in her book titled Ethics, when Mahatma Gandhi, India's beloved leader in the struggle for independence from England, was asked why he had changed his views over the course of a week, he explained, "Because I have learned something since last week."

  It is doubtful that any person is only good or only bad; each of us has shades of each.  We continue to learn as new ideas are presented and new experiences encountered.  Unfortunately, if we have been poorly educated on ethical conduct, we might be faced not only with leaning the basics of ethical behavior, but unlearning bad conduct as well.

  Let us look at some examples of behavior and then examine each situation for what may or may not be perceived as ethical behavior.

EXAMPLE #1

  Dan, an insurance agent, was having a hard time selling enough insurance to make ends meet.  Having a wife and small children, he sought out a company that might be able to offer him more financially.  Eventually, he ended up working for a firm that sold Living Trusts (primarily to retired individuals).  Dan knew very little about living trusts, but the firm would pay him $300 to $600 for every trust he brought in.  His pay depended upon what he charged his clients.

  In his first training session, Dan felt that he would probably learn all that he needed to know to feel right about selling the Living Trusts.  What the training session actually did was lay out the techniques to get people to buy.  Another agent in the training class seemed to know a great deal about trusts, so after the training class Dan made a point to talk to Joe.

  Dan: "Joe, you seem to know a lot about these Trusts."

  Joe: "There's not much to them, at least not those that you'll be selling.  The people put whatever they have into it and when they die the trust distributes it."

  Dan: "I don't mean to sound stupid, but isn't that exactly what a will does?  They said in the class that these Trusts will protect the people from probate and taxation."

  Joe (laughing):  "Don't believe everything you hear.  Look, I've got to go.  Are you biting on their pitch?"

  Dan: "Do you mean am I going to sign on?"

  Joe: "Yeah, are you going to pitch these Trusts?"

  Dan: "I guess so.  Aren't you going to?"

  Joe: "Maybe.  The leads will be good for other things if nothing else."

  Dan now realizes that something must have been left out of the training class.  The money is needed, however, so he decides to go ahead and market the Living Trusts.  The instructor of the class encouraged the agents to also present them to their present insurance clients.  Dan has a fair amount of clients and has mentally calculated how much money he could bring in if only a fifth of his clients purchased the trusts.  Dan is now visualizing how he will spend the money.

Where does "ethics" fit in here?  As long as Dan states the presentation, or pitch, as it was taught to him, is he free from any ethical liability?  Is it really Dan's obligation to further investigate the validity of Living Trusts? Is it Dan's responsibility to understand where a trust does or does not fit?  Or is it the responsibility of the firm who trained Dan to make that determination?

EXAMPLE #2

  Dorothy, an insurance agent, sells long-term care policies.  She knows that the product is a good one, having investigated the company and its policies completely.  Sometimes Dorothy does get frustrated because so few people seem to understand the need of having such a policy.  Since Dorothy's own mother is in a nursing home, she certainly understands very well that such policies are needed.  Recently, Dorothy was having a difficult time getting a 76-year old man and his 73-year old wife to realize the need for such a policy.

  Dorothy: "Mr. James, even though the cost seems high to you, the cost will be even higher if you or your wife go to a nursing home."

  Mr. James: "Look, I know this is probably a good company.  You seem honest to me and I'm sure you believe in what you are doing.  You just don't know me or my family.  My boys have already told us that they will take care of us and I believe they are honest, too.  I've already put the place here in the oldest boy's name.  Did that several years ago.  If I get sick, Addie [his wife] will take care of me and if she gets sick, I will take care of her.  If both of us get sick, our boys will step in.  The point is, I am not going to go to any nursing home and neither is my wife."

  Dorothy: "I know your boys are honest.  You are honest and I'm sure they learned it from you and Mrs. James.  The thing is, we are not talking about honesty.  We are talking about health issues.  You've already told me that neither your boys or their wives are medically trained.  It makes no difference at all that they have told you they would be willing to take care of you.  They simply cannot do it.  Oh, I'm sure they'll try to at first.  Your boys, and perhaps even their wives, will take turns coming by your home to do all the necessary things.  Won't it be great having your daughter-in-law give you a bath?  How will you feel when you hear your sons arguing in the next room about whose turn it is to stay all night?  You've given your home to the oldest son.  I guess the other boys will feel it is his responsibility to do the primary care.  After all, you have, in effect, already paid him to do so.  What if his wife becomes angry about the time he must spend taking care of you?  That’s time away from his family.  As your medical condition worsens and he becomes tired of taking care of you, who will pay for the costs?  The taxpayers?  We already have enough to pay for.  Why should we pay for two more when you could have averted the entire situation?  Mr. James, this is not about who you are now.  Nor is it about what your sons have promised you.  This is about being a responsible person.  This is about taking care of yourself."

  Dorothy appears to be very tough.  The ethical question here has to do with that toughness.  Was Dorothy "brow-beating" Mr. and Mrs. James?  It is possible that her verbal attack may simply make them angry or it may push them into buying.  The point is, is such behavior ethical?  Even if Dorothy believes in what she is selling, is it ever ethical to treat others in the manner she treated Mr. and Mrs. James?

EXAMPLE #3

  Mike, an insurance agent, sells Medigap policies.  A Medigap policy supplements Medicare; it is a health care plan.  Federal legislation standardized Medigap policies in 1992.  Mike's state also set limits on the commission earned by Medigap salespeople, which drastically cut into his yearly income.  Since the mandated cut in his commissions, Mike has been fighting to keep the wolves from his door, so to speak.  He is behind in many of his financial obligations.  On this day, he has an appointment with a woman who is just turning 65 years old next month.  She knows she will need to get a Medigap policy (Medicare supplemental plan) before her birthday arrives.

  Myrtle Todd: "Thank you for coming by Mike.  As you know, I just got your name out of the telephone book because I am shopping around.  I noticed that your office is fairly close to me."

  Mike: "I appreciate your call.  Taking out a Medicare supplemental insurance plan can be a confusing matter, so I know you must have lots of questions.  Since I am a specialist in the field, you called the right person."

  Myrtle Todd: "Actually, I believe I understand Medicare fairly well. I have been reading the information sent out by our state insurance department.  I already know I want Plan F.  It would be nice to get one of the plans with prescriptions, of course, but I don't believe I can afford that.  My neighbor, Betty, has Plan F with AARP and she seems very happy with it."

  Mike: "When did she get her AARP?  Was it before 1992?"

  Myrtle Todd: "No, she is only a year older than I, so she bought it after they came out with their Plan F."

  Mike: "Well, the thing is, Mrs. Todd, AARP is a mail-order plan so they do not have to abide by our state's legislation.  If you have any problems, they simply cannot help you.  Because there are no representatives here, you are also on your own when it comes to any claim problems.  If your neighbor has not had any problems, she is lucky, but it is just a matter of time.  Eventually, she will have problems with her claims.   Have you ever handled health care claims?"

  Myrtle Todd: "No, I haven't.  My medical has been through my husband's work and they always handled everything."

  Mike: "Well, unless you want to learn how to do claim work, you want an agent in your area.  Otherwise, when you have a major illness, you are going to be swamped with paperwork at the worst possible time--when you are sick."

  Myrtle Todd: "Perhaps you are right.  I never was very good at such things and you are close by.  Can I have the payments taken out of my bank like my medical plan is currently done?"

  Mike: "Yes, you could but I don't recommend it.  It is much better to pay for a year at a time.  You'll save money and you won't have to worry about mix-ups."

  Myrtle Todd writes out the check for the year and asks: "Who do I make this out to?"

  Mike: "Make it out to me so I can make sure this is done right away.  Your Medicare starts soon and I don't want your policy delayed."

  Because Mike is having financial problems, he deposits the check into his account and sends in a quarterly payment to the company.  Mike feels confident that he will be able to make up the balance for Mrs. Todd within the next month when he receives his renewal check.  In fact, Mike does send in the balance of the year the next month.  Since he was able to do so, neither Mrs. Todd nor the insurance company ever find out what Mike did.

  This example has several potential questions on ethical behavior.  The main one we are going to focus on is the depositing of the check into Mike's personal account.  It is true that Mike did square everything financially, so Mrs. Todd was never actually injured by his actions.  However, it is certainly illegal to deposit insurance funds into a personal account.  Any agent reading this probably thought of many things that could have gone wrong that would have caused Mike multiple problems (not only with the state regulatory agency, but with the insurance company, as well).

  The ethical question is simple:  Is it ever OK to deposit funds into a personal account or commingle funds?  We know that regulatory agencies say it is illegal to commingle funds, but the question goes deeper than that.  Is it ethical to do so even when there are extenuating circumstances?

EXAMPLE #4

  Shirley, an insurance agent, has just returned to the agency she works for.  She is completing her paperwork for the sales she has made that week.  While going through the paperwork, she realizes that she forgot to get a signature on a replacement form.  Jerry, a coworker, suggests that she simply forge the signature.

  Jerry: "It's easy.  Just put it against the windowpane over the top of another signature.  Everyone does it.  Even this company knows that."

  Since Shirley does not wish to drive back to her client's house, she does as Jerry suggests.  The ethical question is simple:  Is it ever OK to forge another's signature?  This would be an ethical question for anyone in any circumstance, not just an insurance industry question.  As a parent, would we suggest to our child that he or she forge our own signature or that of a teacher?   If the insurance agency truly does know that its agents are forging signatures on insurance forms, is that agency then acting in an unethical manner? Is the agency setting the scene for other unethical behaviors?

  Looking at the conversation between Jerry and Shirley, is Jerry behaving unethically for suggesting that Shirley forge the client's signature, or is Shirley the unethical person for acting upon his suggestion?  Or are both guilty of unethical behavior, each for their own part in it?

EXAMPLE #5

  Jean and George Wren are insurance agents.  They jointly own their own agency and they work out of their home.  They use part of their garage that George converted into a room as their office.  When they do their year-end taxes, Jean states that they use the entire garage area plus an upstairs bedroom for their office in order to get a larger deduction.  In addition, whenever possible, Jean and George "hide" income.  They try to show less income than actually exists.

  Since so many people try to lessen their payments to the IRS, is this behavior ethical?  In the past year, the American people have become painfully aware of the excessive spending habits and abuses of our politicians.  We, as taxpayers, are of course shouldering the burden for the unethical behavior of our politicians.  Knowing that our tax dollars are used in greedy, self-serving political ways, does our responsibility to pay taxes void itself of ethical concepts?  In other words, since we are aware that our tax dollars are being wasted, does this free us from our ethical duty of paying taxes?

  Ethics are not always merely a matter of how we think and act.  Often it is also a matter of character.  So many things come together to form our character that all must be taken into consideration.  Values, principles, emotions, plus many other factors all contribute.

  There is little doubt that each of us are influenced by others.  Even so, for each path chosen, we alone must take responsibility.  Each of us has the ability to build, change, or destroy our own character.  Part of our character is, of course, our ethical guidelines.

  It should be noted that no single act defines our personal character.  Each of us has likely participated in an act that was wrong.  That one action does not define our total character just as one kind act does not build our entire character.  Character is more a matter of adding and subtracting our actions and thoughts.  A good person can do something unkind, yet still be a good person.  A bad person can do something kind for another and yet remain basically a bad person.  We refer to these isolated deeds as being "out of character."  An action that is not consistent with normal behavior is not likely to form or change the character of a person (although that single action can affect another in either a positive or negative fashion).

End of Chapter 1

United Insurance Educators, Inc.