Seeking Security

Chapter 15

Practical Ethics

 

 

 

Ethics (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

 

  While the study of ethics is actually a complex matter with many shades of right and wrong, basically ethics is about an individual's perception of life.  It is the abstract view of what is right and wrong. There may be few absolutes and many varied definitions. 

 

  When it comes to insurance ethics, many of the views of right and wrong are dictated by law and state requirements. Originally, ethics involved the questioning of why certain things should be done or thought. Many of the issues that America and her citizens wrestle with have to do with one simple question: What is the right thing to do? That one simple question does not always have one simple answer.

 

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

 

  As individual insurance agents (and as individuals) we must determine our own goals in life.  We cannot allow others to set them for us, no matter how well intentioned those "others" may be.  Ethics help us to set goals that will bring about pride in ourselves and in 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 lives.

 

  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 not his ethics.  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.

 

  A wise insurance agent will certainly follow state and federal regulations, but ethics goes beyond what is simply mandated by state or federal authorities.  Ethics define who we are.  Once a person, in any line of work, realizes that their daily actions (and even lack of actions) pronounce who they are; perhaps ethical behavior will once again be "in style."

 

 

Defining Ethics

 

  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?

 

  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 were so profound and complete that nothing new has been said since Plato or Aristotle on this subject. 

 

  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, but 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 former 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.  Doing nothing is as much a statement as doing something is.

 

  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.

 

  Children learn from what they see and hear.  Children 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 undesirable 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 American arrive at their code of ethics to some degree through their religion.  In fact, the Bible sets down many prescriptions for ethical behavior.  The Bible is probably the best known source of ethical advice.  Even so, not all have agreed with the Bible's concepts.  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 learning the basics of ethical behavior but unlearning bad conduct as well.

 

  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 we felt 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).

 

 

Why Be Ethical?

 

  Probably every religion stresses our need to give to the poor.  While it is certainly true that the poor do need help, the reason we need to do so goes beyond that.  When we do something for another, without any self-interest involved, our personal gain is often much higher than any gain realized by others. The true giver helps others quietly. To help others, and loudly proclaim the deed, is likely a selfish act with personal recognition sought, rather than true giving.  An insurance agent that consistently gives good service to his or her clients, when no pay will be received for this service, is probably doing much to cement their business, but it probably goes beyond that.  The agent probably also has a personal integrity that mandates such service be given.

 

  What does this have to do with ethical behavior?  Ethics is not entirely about yourself;  it is also about others.  It is not so much what one knows that makes an individual ethical, but rather what he or she understands.  A truly ethical person realizes that their behavior is their loudest statement about themselves and those they associate with.

 

  Making ethical decisions addresses four basic issues:

1.      Is it possible to teach ethical behavior?

2.      What is the scope of ethics?

3.      What does it take to be a moral person?

4.      What are a person’s responsibilities to other moral persons?

 

  There is no doubt that each of us, regardless of our occupation, faces ethical issues on a daily basis.  However, anyone in an occupation that has a public interest is especially faced with ethical issues.  Insurance has a "public interest."

 

  Ethics are standards to which an insurance agent or broker must aspire to; it is feeling a commitment to each client.  Every type of profession tends to have an informal code of ethics which may sometimes be more understood than written.  Ethics are a means of creating standards within any given profession to upgrade it and give it honor.  It is a means of measuring performance and acknowledging outstanding individuals.  Ethics are often a means of providing priorities and building traditions based on integrity.

 

  It would be hard to imagine doing business with anyone that we knew to be unethical.  Can you imagine turning over the control of your financial affairs to an attorney that had been convicted of stealing from his clients?  Would you buy a car from a person who had knowingly lied to others about the cars he represented?  Would you deal with an insurance agent who had repeatedly misrepresented the products he or she sold?   Ethics are the only element, other than legal mandates, that adds an element of trust to many industries.  It is very difficult to mandate ethics. Only behavior, as we previously stated, may actually be mandated.  If a person is ethical, that is something extra within themselves that simply adds to their trustworthiness.

 

  No matter what our profession may be, as individuals, each of us faces ethical issues each day.  Some are very simplistic in nature while others are complex and may have many sides (and many correct answers) to them.  We face issues that are personal, such as How much should I give to the poor?  Is it wrong for me to take drugs?  Should I report someone who is cheating (whether that happens to be in school or elsewhere)?  These types of ethical questions are all around us.

 

  Some types of ethical or moral questions can be directed to our religious institutions for support in determining the right answer.  Sometimes the answers can be found in our legal system.  If our state or federal government says commingling funds is illegal, for example, then we could also state that it must be unethical as well.  Sometimes, determining what is ethical is simply a matter of what feels right emotionally.  We have all said or heard someone else say "It just doesn't feel right."  That feeling of right and wrong is probably the result of our childhood upbringing.  Even if we do not distinctly remember being taught that a particular action is either right or wrong, somewhere in our upbringing or past experiences, we have received such teachings.

 

  While this chapter cannot instill ethics in anyone who has none, it may provide the tools for determining the more complex issues.  By using basic concepts and theories and by having an appreciation of what constitutes an ethical solution, decisions may be made on the basis of reason.

 

  It should be noted that different conclusions may be reached to the same ethical question.  It does not mean that one solution is right and the other wrong.  Ethical questions often have multiple answers, all of which may be correct.  Many ethical questions involve multiple hues; some decisions may be based solely on facts, while others may be based less on facts and more on emotional factors (or what simply feels right).

 

  We asked the question: Is it possible to teach ethical behavior?  This, of course, depends upon multiple factors.  First of all, does the person desire to be ethical?  As with all things, the person must want to achieve the goal at hand.  If other goals are more important to the individual, then perhaps it will not be possible to teach ethical behavior.  If, however, ethical behavior is important to the individual, even if other goals are also sought, ethics may be taught.

 

  One of the first lessons taught to children by their parents is sharing.  Sharing may be one of the most important ethical values taught.  Sharing is the opposite of greed. As adults, we learn to share in numerous ways, but sharing begins as children.  The shift from securing our own interests to sacrificing on behalf of others is an essential part of what is meant by "ethical decision making."  This may especially come into play for insurance agents.  The choice to make a sale and earn a commission in any way necessary rather than sacrificing the sale on behalf of honesty is an ethical decision.  The selfish person cannot routinely make such moral decisions, or perhaps more correctly, will not make such decisions.

 

  It is necessary to understand that one of the general features of taking an ethical point of view is a willingness to take into account the interests, desires and needs of others.  A person may argue that it is necessary to look out for one's own interests, desires, and needs.  While this is certainly true to a point (we must clothe, feed and house ourselves and our families), taking our own interests into account need not mean making unethical or immoral decisions regarding others. Even commission salespeople are able to make a very good living while still maintaining ethical behavior.  In fact, the best salespeople do not need to behave unethically because they have mastered their trade through the development of communication skills and professional training.

 

  When a child asks his or her parent "Why do I have to share my toys?" the reply may be "Because if you don't share your toys with your sister, she will not share her toys with you."  This simple logical answer teaches the child a valuable lesson.  Our interests are tied to the interests of others.  Just as the man who is known as a liar or a thief will find others unwilling to trust him, the insurance agent who is not ethical will, at some point, find making a living impossible because no client will wish to deal with him.  We are better able to achieve our goals when we recognize the goals and interests of others.  Plato argued that immorality (unethical behavior) is ultimately self-defeating.  While the con artist may not believe this and some unethical people do seem to prove the point, most people believe that, at some point in time, each person receives what they have given.  The Bible says we will reap what we sow.  Even if we do not get back what we give others (whether that be good or bad), most people would agree that it is easier to be happy with ourselves when we feel we have done the right thing.

 

  Not everyone believes it is in their own self-interest to be ethical in their behavior.  Some who reject the idea of other's interests and desires are egoists.  Do not confuse this with egotism.  An egotist is a person who is self-absorbed or stuck on themselves.  These people make poor egoists.  Webster's dictionary defines egoism as the doctrine that self-interest is the basis of all behavior whereas egotism is the habit of being too self-absorbed, talking too much about oneself or conceit.

 

  Psychological egoism maintains that people are always motivated to act in their own perceived best interest.  Psychological egoism is not an ethical theory since it does not tell people outright how to behave.  Rather it attempts to explain why people behave in certain ways.  Ethical theorists consider this theory, however, since it does have a bearing on their theories of ethical behavior.

 

  Another version of egoism is a genuine ethical theory.  Traditionally called ethical egoism, it maintains that people ought to act in their own perceived best interest.   An ethical egoist argues that people should act in their best interest at all times because it is good for the general economy (providing industry and jobs, for instance).

 

 

  Although ethical egoism and psychological egoism are separate and distinct, they are often meshed together by writers and speakers.  Psychological egoism is an explanation of behavior, not a theory, whereas ethical egoism is a theory of behavior.  In many ways, ethical egoism can be substantiated by those who prescribe to it.  The English philosopher, Thomas Hobbes, was a well-known believer in ethical egoism.  Of course, the interests of individuals come into conflict with others whose interests are different.  This is where the greater interest comes into play.  Even while pursuing our own personal interests, it is possible for those interests to be swayed or checked by the interests of others because of possible consequences which one may wish to avoid.  That is how laws manage to control behavior even if they are unable to control ethics. Under the theories of ethical egoism, it is in the individual's best interest to follow the established laws because the fines or penalties imposed are not desired.

 

  In the marketplace we all try to buy low and sell high.  That is certainly an attempt to pursue our own self-interest.  It is unlikely that the buyer worries about the seller when buying low, nor does the seller worry about the buyer when selling high.  Individual self-interest is at work.  Even though this may be an excellent example of ethical egoism, it tends to be both orderly and productive to our society.  This points out that this theory has positive dimensions to it despite the selfish basis.

 

  A political economist, Adam Smith, believed in ethical egoism.  He felt that people, while being interested in their own needs and desires, created good for society as a whole.  Smith felt that economic conditions were created and expanded when people acted on their own behalf.  Our American economy is, in many ways, an example of this belief. 

 

  If we were to fully believe in psychological egoism, which states that humans automatically act on their own behalf, many of the acts of heroism that we see could not be explained.  The passenger who survived the plane crash in the Potomac River only to drown because he repeatedly handed the rescue rope to others could not possibly have been acting on his own behalf.  Perhaps it could be said that he was not being heroic so much as he was avoiding guilt which he would have felt had he left the others behind.  This is not likely, however, since those he saved were strangers to him.

 

  There is more day-to-day heroism than one might realize.  Such simple things as the child who shares his lunch with another student, the woman who gives her last dollars to a homeless person, the man who donates his only day off for a food drive are all acts of kindness that consider the needs and desires of others.

 

  This still brings us back to the basic question:  Is it possible to teach ethical behavior to others?  There is no clear answer.  An agent who has never considered ethical behavior might suddenly begin to do so if the agency where he or she works begins a strong ethics campaign.  On the other hand, an agent might continue to act unethically even if threats are made to recall his or her license to sell insurance.  One thing is certain:  the effort must be made to emphasize ethical behavior because there will always be those agents who will respond favorably to such efforts.

 

  What is the scope of ethics?  This is a massive question that could be carried to great depths if we choose to.  In many industries, including the insurance industry, the professionals have knowledge that the general population does not have.  As a result, those individuals who seek out the professionals must rely upon their honesty and integrity.  Therefore, a feeling of ethical standards must exist.  It was the potential for abuse of power that provided a set of rules for what is commonly called "ethical behavior."  Sometimes, ethics are written standards which may be mandated by law on either a local or federal level.  The premise, upon which practical ethics must be based according to Stephan R. Leimber of the American College where he is a professor of taxation and estate planning, is that power must be exercised in the interest of the clients who seek the professionals out and may not be exercised solely in the best interest of the professionals themselves.

 

  Parts of the insurance industry have been labeled (often unfairly) as lacking ethical standards.  Usually what we find is not an industry as a whole without ethics, but rather some individuals who have received much publicity.  The insurance industry which deals with senior products is one section which has received bad publicity fairly often.  Part of this has to do with the age of the victims.  If a 25-year-old is taken advantage of, many would think he was simply stupid or uneducated to have allowed it.  If a 75-year-old is taken advantage of, however, publicity is sure to follow.  This is not surprising since a 25-year-old is perceived as more likely to have the ability to make sound judgments in comparison to a 75-year-old person (although many older citizens are far wiser than we give them credit for).  Also, our older population controls most of the nation's wealth.  If a salesperson (in whatever industry) is greedy and unethical, he or she is most likely to hit those with money.  That would typically be older people.

 

  We should also ask ourselves why society seems to consider it less offensive to take advantage of a 25-year-old person.  If an unfair advantage (a con job) exists, why does it matter how old or young the victim is?

 

  When we look at what the scope of ethics is or could be, one might be surprised at the extent to which it could be taken.  Amy L. Domini and Peter K. Kinder have jointly authored a book called "Ethical Investing" which looks at how our standards may even be brought into the field of investing.  For example, if an agent were an animal activist, would it be ethical for them to represent companies that use animals in the laboratory or for testing?  If a client is an environmentalist, should he or she invest in any type of investment that is detrimental to the environment? 

 

  Ethical investing is becoming big business.  It is interesting to note that many people are more than willing to make commissions on the investing goals of ethical activists.  There is certainly nothing wrong with this, but it does bring out the fact that investing ethically does not necessarily mean that those representing the products have the same goals or ideals.

 

  Sometimes, people or cultures do not agree on what is ethical behavior.  What one culture or society may consider ethical another may not.  Even within the same culture or society, people may disagree on what is and is not ethical.  We often see these differences between religions as well.

 

  Every person probably has some degree of greed or selfishness within them.  The ethical person realizes this possibility.  Since ethics is a code of values to guide man's choices and actions, the ethical person will bypass their own greed and do what is perceived as best for the majority of people or best for the person they are dealing with.  In choosing his or her actions and goals, constant alternatives are faced.  It is not always easy to decide which choice is best and ethical.  Without a standard of values, ethical choices would be very hard to make.  At some level, our religious background may set the standard of values by which we make our choices.  However, we arrive at it, at some point, an understanding of how others feel determines many of our ethical decisions.

 

  What does it take to be a moral person?  This is basically a simple question.  Most people do know right from wrong.  While what is right may not always be agreed upon, as long as a person acts on what they perceive to be right, then they are acting ethically.

 

  It is unfortunate that so many people in the insurance sales force perceive their industry to be one of disdain.  Insurance is something that people really do need for the security of themselves and their families.  There is a remarkable story about an insurance salesman named Martin England, who was white and from the South.  He learned that Martin Luther King, Jr. was not adequately covered by life insurance.  Realizing the dangerous job Mr. King was performing, he was understandably alarmed.  In fact, he was so concerned that Mr. England began to try to contact Martin Luther King.  As you can imagine, that was not an easy task.  Finally, Mr. England did succeed in getting Mr. King to sit down with him and allow him to present the situation as he saw it.  Martin Luther King, Jr. did buy life insurance from Mr. England.  Only a short time later, Mr. King was killed by an assassin.  Of course, his death was difficult on his family, but think how much worse it would have been had they also been left destitute.  An ordinary insurance man went to un-ordinary lengths to help another.  In the process, he earned a commission, but what he gave the King family was much more valuable than what he earned.

 

  The ethical person simply believes in right and wrong and chooses to act on his or her beliefs.  The ethical insurance agent does not believe it is necessary to trample their potential clients in order to get the sale; they do not believe it is necessary to tell half-truths or leave out needed information.  Of course, it is necessary to be well prepared and to understand good communication techniques, but any job requires certain types of skills.  

 

  It is common for ethical people to have some form of religion in their lives.  Religion by no means constitutes ethical behavior, however.  Ethics does not need religion to exist.  Ethical people tend to be warm and caring by nature, it is said.  Whether or not this is true, we cannot say, but ethical people do certainly seem to place a value on others.  In fact, valuing others is an aspect of ethical behavior.  Perhaps you cannot have one without the other.

 

  It is not possible to be one person off work and another person on work.  Who we are is defined everywhere we go and in everything we do.  Three questions must be addressed:

1.      What kind of person am I?

2.      What kind of work do I want to do?

3.      What do I want my legacy to be?

 

 

  Just as a man is defined by the lies he tells, and a thief is defined by his actions, we are defined by our everyday activities.  We do not necessarily have to be a liar or a thief to define ourselves as less than honest.  Many of our political figures are not actually dishonest and yet they are not perceived to be honest either.  How do we want ourselves defined?  Answering such questions cannot be avoided.  Even when we try to ignore them, we are still answering the questions with our actions.  It must be realized that the questions are asked in the minds of every person we come in contact with.  They look at us and they form opinions on these questions.  Coming to terms with the basic philosophical questions about what we are doing with our lives may be the most practical of all possible ventures.

 

  When we ask, “what kind of work do you want to do?” we are referring to the quality of your work.  Forging signatures, misstating health conditions, omitting information for the sake of a sale, and so forth, determines your quality of work.  True professionals simply feel their integrity is worth more to them than a quick commission.  Certainly, anyone can make an error and that may not be a reflection of their professionalism, as long as the error is corrected.  If an error is made (even an honest error), and no effort is made to correct it, then again that reflects on the type of work performed.

 

  The question What do I want my legacy to be? refers to how others will remember you.  Some may not care about this point, but it will be important to those who love you.  Most of us probably do wish to be remembered in a favorable light.  Can you imagine being remembered for the quantity of errors made or for the dishonest and unethical actions taken?

 

  Good business requires that you know what you are doing.  Sometimes this involves competency.  Of course, most people would not view themselves as incompetent even if they are.  Sometimes, the industry itself must remove those within it that are not competent.  Sometimes, competency is merely a matter of obtaining required or necessary education within any given industry.  It is always interesting to note the amount of sincere education acquired by the leaders in an industry.  The leaders are nearly always more concerned with educating themselves to a greater degree than are those at the bottom.  Education and ethics do tend to go together.  It should be noted that success and education also go hand-in-hand.

 

  How many times have you, as an insurance agent, sat in an educational seminar and observed the quantity of others who are obviously not interested in learning?  Of course, it is also the responsibility of the educators to make the seminars interesting.  However, there are always those who attend simply because they must.  In our business, this constitutes unethical behavior.  Constant learning is very important in the insurance industry and those who realize this will be better equipped to do a good job.

 

  It is also important to know why you are doing what you do.  For insurance agents, that means it is important to understand why your industry and services are valuable.  We have all known an agent who seemed to just be going through the motions of their job (selling insurance) without any pleasure being received from it.  Whether a person is an insurance agent, a plumber or a teacher, there must be pleasure derived from what they are doing.  Unless there is some pleasure in the job, the job will be done poorly.  Few of us could do an outstanding job at something we hated.

 

  Often the reason an agent is not enjoying their job is simply because they do not understand why they are doing it.  If their agency has lost sight of ethics chances are their agents will not know why they are doing the job (beyond making money for the agency).  In the midst of the Watergate investigation, Jeb Magruder announced that he became involved because he had misplaced his "ethical compass."  Newspaper columnists grabbed on to that phrase and many jokes evolved from it.  The truth is, however, that it is a very fitting way to describe the situation.  The majority of people do know what is right and what is wrong.  That is not to say that, if surrounded by only one type of morality, that one's "ethical compass" cannot only be misplaced, but set off its direction as well.

 

  It is unlikely that most agents would consider who they work for to be a matter of ethics.  However, it may end up being connected if ethical behavior is not deemed important by the company.  When an agent (or anyone, for that matter) feels that their role day-in, day-out is primarily connected to making money without any regard as to how the money is made, ethics may easily take a back seat.

 

  How does an agent know, other than the extreme cases, if their agency lacks ethics?  It may not always be a black-and-white situation.  Sometimes the decision can only be a personal one if the agency is not noticeably to one extreme or the other.  One would not expect an agency or brokerage to be outright unethical.  Each state has mandated certain procedures that a company must follow which usually prevents such outright unethical behavior.  It is more likely that the company would ignore unethical or questionable actions of their agents who would, therefore, condone such actions.

 

  Some examples of this might include:

 

EXAMPLE #1

 

  Joan, an insurance agent, is sitting in the agent's room of the agency where she works.  As she is completing her paperwork on the business she had written that week, she notices that she forgot to have one form signed.  Another agent in the room, Matt, suggests: "Don't worry about it.  Just put one of his signatures against the window pane and copy over it onto the one you need."

 

  Joan: "Isn't that illegal?"

 

  Matt: "Maybe, but everyone does it.  If you're not, then you're the only one who isn't."

 

  As Joan asks around, she discovers that Matt was correct. Virtually everyone she spoke to about it confirmed that they, too, copied signatures where one was forgotten.  Joan found that nearly every agent intended to get all the required signatures, so it was not a matter of purposely omitting them.  Rather, it was an easy way to perform below necessary levels of competence.  Several agents even mentioned that the management had sometimes been present when signatures were copied.  They simply left the room and acted as though they had not seen it.

 

  While we know Joan was unethical in copying the signature, there are additional ethical questions involved.  Is Matt unethical for advocating that another person forge a signature?  Is the agency unethical by ignoring the behavior going on?  By ignoring the behavior, is the agency condoning it?  If Joan had decided against forging the signature, would she then be free of any other agent's ethical behavior?  Or, having the knowledge of what was going on, would she be unethical for her to remain at the workplace?  Should she go elsewhere to work and leave it at that or, in the interest of ethical behavior and responsibility, should she report the behavior to the State Insurance Department and perhaps to the insurance companies as well?  Since Joan had developed several good friendships among the agents, how do loyalty to those friends and her responsibility to ethical conduct correspond?

 

  As you can see, ethical behavior is not a simple matter.  Do your standards of what is ethical apply only to yourself or to others as well?  When an individual’s view does not correspond to the views of others, who is right?

 

 

EXAMPLE #2

 

  Jerry, an insurance agent, is in the home of a retired couple. He is there representing a Medigap policy from a well-rated company. The company that the couple, Marge, and Herb, currently has is also with a well-rated company. They purchased the policy several years before and have not used it very much since both Marge and Herb have enjoyed good health.

 

  Jerry: "You said you haven't used your policy very much, is that right?"

 

  Marge: "Yes. Luckily, both of us do enjoy excellent health. Of course, we watch what we eat and we do exercise during the week."

 

  Jerry: "I don't want to alarm you, but the policy you have probably would not have done a very good job. The company is in financial trouble and we don't know yet if it will make it or go under."

 

  Herb: "That is certainly a surprise.  We were told it was an A-rated company when we bought it."

 

  Jerry: "It might have been at the time.  So many companies that were previously strong have had problems in the last few years.  I'm sure you've seen that in the news."

 

  Jerry does replace the policy owned by Marge and Herb.  Jerry knew that their policy was actually safe because the company was not in any financial trouble.  The company he gave them was also sound and did give the couple basically the same coverage they already had.  There would be no problem with pre-existing conditions, so that was not a concern in the replacement.  Even the price was approximately the same.

 

  Since he did Marge and Herb no harm, was Jerry justified in replacing their policy?  Jerry is basically a responsible person who will keep in touch with Marge and Herb.  If they need any help with claims, the agency that employs him will help them.  Even so, there is no doubt that Jerry lied in order to get the sale.  Most states require that an agent truthfully represent the financial status of an insurance company (theirs and others), so it is likely that what he did was illegal.  Aside from that, however, was what he did serious?  Is it ever acceptable to misrepresent another company?  If the couple, Marge, and Herb, no longer had an agent representing them or if they never had any contact from their agent, would Jerry be justified in taking over the business?  Jerry will keep in contact and will give good service.  Can the misrepresentation be rationalized from that standpoint?

 

 

EXAMPLE #3

 

  Jenny, an insurance agent, has a lead card for a couple regarding life insurance. They sent it in about 60 days earlier.  Jenny does not call, but stops by their home unannounced. When she does so, she discovers that they think she is from a company who had called them on the phone and set up an appointment.

 

  Glenda Maxwell: "Aren't you a day early?  I thought we set this up for tomorrow night."

 

  Jenny: "Oh, I'm so sorry.  I thought it was for tonight."

 

  Glenda: "Since you're here, we may as well go ahead. It really does not matter anyway. Ted is in the garage. I'll go get him."

 

  While Glenda goes to the garage, Jenny notes the company name on the calendar along with their phone number and the agent's name. The next morning, she calls the company and cancels the appointment using Glenda Maxwell's name.

 

  Since Jenny supplied the couple with the insurance they were looking for, does it matter that they thought she was representing the agency that called them?  Should Jenny have given the couple a chance to hear the other agent's presentation, which would have allowed them to compare products?  Since selling is so competitive, is this merely an aspect of the selling game, having nothing to do with ethics?

 

  When Jenny relays what happened at her agency's office, everyone tells her how lucky she was to happen into the situation.  No one, including the management staff, seems alarmed that she did not straighten out the misunderstanding.  No one seems alarmed at her call to the other company (pretending to be their prospect).   In fact, many agents seemed to appreciate her ingenuity.

 

  If there is an ethical question here, does it only concern Jenny?  Is the company she works for responsible for guidance in such situations?  Since this is not something that would routinely come up, is there any need for the company to address this situation at all?

 

 

EXAMPLE #4

 

  John works for a large investment company. John is a strong believer in environmental issues.  Because of his beliefs, he will not refer any client to any stock or company that John feels harms the environment. John seldom allows his clients to see any investment with which he does not agree. John's company knows that John will not present any company with which he does not agree. The company says nothing as long as John brings in a good quantity of business. If his business is down, however, they do bring up the matter.

 

  Is it ethical of John to only show those companies that he agrees with?  Secondly, is it ethical of the company he works for to only be concerned about it if his sales are down?  Could John ethically represent companies that he opposes?  Which set of ethics should come first: his own regarding the companies or his responsibility to his clients to allow them to make their own choices?

 

  If the company that employs John should require that he show all options to their clients, is John ethically bound to follow his employer’s requirements? Whose ethics come first: John's, the client's, or the employer's?  Different people or groups often do not agree on what is or is not ethical.  Who should decide which ethics come first?  This question might come under the heading of "What are a person’s responsibilities to other moral persons?"

 

  Basically, all of these concepts or questions bring us back to the original point.  A person must know why they are doing a particular thing.  In the case of selling insurance, if the agent does not understand the reasons why insurance policies are important to own, it would be very easy to lose track of important ethical elements.  The lack of this understanding might eventually force the agent to deal with the basic inquiries that come about when ethics are pushed to the background.

 

 

What are our responsibilities to other moral persons? 

 

  Most people realize that they are responsible for their actions.  In sales, we often hear the statement "For every action, there is a reaction."  This is generally true in life as well.  It goes beyond the obvious situations (if you smack someone, they may smack you back).  If you are rude to a person, you may not realize the "reaction" at that moment, but one will surely follow.  The reactions may not always be noticeable to others.  This is especially true when it involves emotions, such as hurt feelings.  Since each of us is responsible for our actions, the question then is "Are we responsible for the reactions that follow?"

 

  Some reactions are directly tied to our actions and are predictable.  If we lie in order to obtain money, our actions are then directly tied to the reactions that occur.  What we did was deliberate, and the "reaction" should be no surprise.  In such situations, we are responsible for the reactions.

 

  In other situations, we cannot be responsible for the reactions.  If we act in a responsible manner and a reaction occurs that hurts or offends others, we may not necessarily have any responsibility.  What a person does in everyday life is the result of multiple decisions made over their lifetime.  Those decisions include our perception of whom and what we are.  Our character (or lack of it) is made up of our day-in, day-out decisions.  The irresponsible person will not care what his or her responsibility to other moral people may be.  Therefore, we will look only at what an ethical person's responsibility is towards other ethical persons.

 

  Let us look at the example of John, the investment counselor.  He would not present any investment to his clients with which he did not personally agree.  Let us assume that most of John's clients are themselves ethical people.  Since his clients are themselves ethical, is John wrong in making such investment choices for them without giving them a chance to bring out their own sets of ethics?  What is John's responsibility to other moral or ethical persons? 

 

  Moral or ethical responsibility is not a single choice.  Such choices are made daily in many things that we do.  If we assume that our children are basically moral people, then what are our responsibilities towards them?  This may also be said of our peers at work.  If the majority of the agents at the firm we work for are perceived to be ethical people, do we then owe it to them to also be ethical?

 

  Agency XYZ prides itself on being ethical.  The owners and managers stress such behavior at all company meetings.  While sales are certainly promoted, it is made clear that the sales must be honestly come by.  XYZ Company seeks out the very best products available so that their agents can present a superb policy to their potential clients.  Training and education is given a top priority by the company as well.

 

  It would probably be safe to say that XYZ Company has invested not only time, but money into their company and their sales force.  Since they have stressed ethical behavior, it is also probably safe to say that they do not feel such behavior will hurt them financially.  In fact, they probably feel it will benefit them financially.  Given this scenario, XYZ Company has probably attracted those insurance agents who also give a high priority to ethical behavior.  If an unethical agent came to work there and misrepresented the products (theirs or others), XYZ Company, or any other aspect involved in the sale, how would this affect the other ethical agents?

 

  An agent once relayed this true story.  She had been building a client base for about two years when the agency she worked for became the subject of an investigation by the state's insurance department.  Since she had always prided herself on giving her best efforts to her job and her clients, it was distressing to see the agency she worked for on the evening news.  It did not matter whether the agency had actually done anything wrong.  It did not matter whether she had done anything wrong; simply being connected by virtue of employment caused credibility problems.

 

  In this same context, the agents at XYZ Company would be affected by an unethical agent even though the other agents were very ethical in their behavior.  People believe in the old saying "It only takes one bad apple to spoil the whole barrel."  Therefore, one unethical agent will affect how others in the same agency are viewed.  In this context, every agent has a moral or ethical responsibility to all the other agents.  In the case of the agency being investigated, that agency had a moral or ethical responsibility to all of its agents.  Of course, it is the job of the state's insurance department to investigate any complaint.  That certainly does not mean that anyone is actually guilty of doing something wrong.  Chances are, however, if it hits the evening news or the newspapers, it will not matter whether there is any guilt or not.  Opinions will be formed.  Therefore, each insurance agent and each insurance agency has an ethical responsibility to act in a way that will not cast doubt on themselves or others.

 

 

Choosing to Sell Ethically

 

  Sociologists have contended that determining our own identity is not an easy thing.  Many people never realize that we are able to choose who we are by the choices that we make.  Certainly, we are influenced by many things, some of which are beyond our control.  Even so, most of whom and what we are, we determine ourselves.

 

  Since reason is man's basic means of survival, it is not surprising that we have the ability to form who and what we are. This is called Objectivist Ethics. Since everything man needs has to be discovered by his own mind and produced by his own efforts, there are two basic points to becoming the person we choose to be: thinking and actions. We decide who we will be, and our actions carry out those thoughts. To be an ethical person, we must, through our thinking, choose to be so, and then productively work towards it.

 

 

  If some people do not choose to make any conscience choice, they will develop by imitating and repeating the actions of those around them. We often accuse our children of bending to peer pressure, but adults are just as likely to do so. This is why it is so important that agencies and management staffs make ethical behavior a priority in the workplace. Those who simply repeat the actions of those around them seldom make an effort to understand their own work. Unfortunately, who is imitated is seldom a concern to these individuals. As a result, one bad apple can, in effect, spoil the barrel.

 

  Those who do choose to think out their actions and work productively towards a goal still do, however, remain the main force. They are the people who are most likely to be copied by others. Even those who survive by using brute force, or by making others their victims in some capacity, survive only because someone else was thinking and working productively.  In other words, con men survive off the thinking efforts and hard work of others. Those who use brute force to steal or loot survive off the thinking efforts and the hard work of others. It all comes back to those who do use logic and conscience choice.

 

  Objectivist Ethics, as a theory of ethics, holds man's life as the standard of value and his own life as the ethical purpose of every individual man. The difference between "standard" and "purpose", as used in this context, can be important. "Standard" is an abstract principle that serves as a measurement or gauge to guide a person's choices in his or her achievements or specific goals. The goal itself or the achievements obtained become the "purpose." Probably every person has some "purpose" or goal in life, but not everyone has a "standard" of life.

 

  Pete was born very poor. This poverty made such an impact on him in his childhood that he now strives to become wealthy. He obtains his accumulating wealth by whatever means necessary. Pete definitely has a goal or purpose in life (becoming rich), but he does not have any standards. There is little doubt among those who know Pete that he will become very rich.  Along the way, however, Pete is not finding much happiness. He has not thought out the goals he has established. Pete knows what he is doing, but he does not understand why he is doing it. Pete would be surprised (and perhaps even laugh) if someone told him that ethics are a part of finding happiness.

 

  Our history is full of wise men who wrote about the philosophies of life. While many of them did not agree on many points, most did agree on one:  lack of ethics promotes disorganization, financial turmoil and, sometimes, even the demise of governments.  If the lack of ethics can bring down governments, surely it can also bring down insurance agents and agencies.  Often agents choose to do nothing when they realize another agent is incompetent, especially if the agent is a friend.  Yet incompetence is also a point of ethical conduct.  Again, if nothing is done, that is a statement of ethics and can bring down an agency.

 

  As individuals, we may often feel that we have little control over others.  This is true to a certain extent, but we do actually have more control than we might realize.  The control we have is the ability to choose our own way of life.  There is little doubt that what we do on a day-in, day-out basis affects everyone we come in contact with.  We are also impacted by others in the same manner.

 

  Tim is driving to work and the traffic is very congested. Even so, his mood is bright and he is humming along with the radio. As he merges into another lane in anticipation of an upcoming freeway exit, the man he pulls in front of becomes angry. Perhaps he feels Tim has cut him off, or maybe he is just a sour person in general.  For whatever reason, the driver is angry.  The other driver whips alongside of Tim's car, rolls his window down and shouts angry explosive words full of the four-letter type.  The angry driver also gives Tim a few well known hand signals.

 

  Although Tim did not feel that he had done anything wrong, his mood instantly changed.  He no longer hums with the radio. When he arrives at work, his secretary greets him cheerfully.  Tim's response is short and bleak. Although he did not actually say anything bad to Jane, his secretary, she felt that he must be angry with her for some reason.  Had she forgotten to do something yesterday?  Jane spent her morning feeling worried and stressed.

 

  By the afternoon, Tim had forgotten about the driving incident (or simply put it behind him), but Jane was still affected. As the day progressed, she expected some explanation from Tim about what she had done that was upsetting to him. When no explanation came, her stress mounted. That evening on her way home, Jane began to wonder if Tim was simply unhappy with her work in general.  That night she barely slept.

 

  On her way to work the next morning, Jane stopped to get her car filled with gas. When she handed the clerk a twenty-dollar bill, the clerk miscounted her change. When Jane noticed she was short a dollar, she curtly pointed out the error to the clerk.

 

  After Jane left, the clerk, Susan, felt humiliated.  It was obvious to her that Jane thought she was trying to cheat her by keeping an extra dollar.  Susan never became angry, but she did feel stupid and inferior.  It was just one more incident that confirmed to Susan that she would never amount to much.  She figured she would probably always work for minimum wages because she simply did not have the ability to do any better.

 

  Are these examples of how we affect others an extension of our code of ethics?  Often, we forget that ethical behavior is not only connected to such things as paying our taxes fairly, following the laws or telling the truth.  Ethical behavior can also be connected to how we treat others.  Ethics is a code of values to guide man's choices and actions.  In choosing one's own actions and even goals, we must face constant alternatives.  Even such things as the manner in which we speak to others are a part of our daily alternatives.

 

 

Human Nature

 

  Some have argued than man's nature is to be selfish.  In order for a person to choose various alternatives on a daily basis, he or she must have a standard of values.  The term "value" presupposes an answer to the question: of value to whom or for what?  This is where an inborn selfishness might be considered.  What is the end goal or purpose?  Who is the perceived or intended beneficiary of the action: oneself or others?

 

  To be selfish is to be motivated by one's own self-interests.  Insurance agents are often accused of this.  For an individual to center on their own self-interests, they must have considered what constitutes their own self-interests and how to achieve it.  Because a selfish person chooses his goals by the guidance of reason, it is hard to believe that selfishness is an accident (or a lack of training in the case of insurance salespeople).

 

  Nathan, an insurance agent, has been in the business for only a year.  Even so, he has been able to build up a fairly good sized clientele in the health market.  Soon after he became an agent, he was told that replacing his own business can bring added advantages in the commissions earned.  Although Nathan continues to work to build up his clientele size, he does not miss a chance to replace business (his own or someone else's) anytime the chance arises.

 

  Recently, Nathan realized that annuity sales could bring in good commissions.  His initial intent was simply to bring in new business in the annuity field.  After a while, however, he found that it was not particularly difficult to replace annuities.  Of course, the client generally had early surrender penalties, but Nathan learned how to justify not only the penalties, but the new surrender period as well.  Nathan was not above misrepresenting other companies to achieve his goals.

 

  Although Nathan is fairly new to the occupation of insurance, his sales practices are well thought out.  Nathan received very little training from the agency where he originally worked.  Most of what Nathan knows, he learned on his own or from other agents.  It might be argued that early specific training might have made a difference in how Nathan looked at his sales practices.  However, from an ethical context, it seems fairly obvious that Nathan is not acting irrationally.  He has spent time thinking out his approach to sales.  He listens to other agents and even solicits their advice.  Selfishness is seldom a matter of emotions or feelings; rather they tend to be thought out actions.  That is not to say that selfish people are not emotional in nature because they may be.  What we are saying is that a selfish person determines their goals on a thinking or reasoning basis.

 

  We have been talking about ethics in the workplace, but it should also be noted that ethics IS hard work.  Who among us would not enjoy an extra $5 (even if it were not due us)?  If our boss thought we were the one who did something wonderful, who would not like to take that credit, even if it belonged to someone else?

 

  Being ethical can be very difficult when being unethical is sometimes more rewarding from a financial or public standpoint.  The public standpoint is often overlooked.  If we feel strongly about something that no one else seems to, it is very easy to keep quiet.  In fact, that is precisely what gets "followers" in trouble.  When a person knows something is not right, but no one else is saying anything, it is easy for the individual to simply go along with the group.

 

  Greg works for a very large insurance agency. Greg has always had very strong religious convictions and, as a young man, took much teasing from others regarding his so-called "prudish" outlook. Over the years Greg simply found that keeping quiet was easier. After all, he reasoned, as long as he personally held his moral ground, what others did was their own business.

 

  Mike was also an agent with the same agency as Greg. As time went by Greg found mounting evidence that Mike was "clean sheeting" his applications. One day in the field Greg ran across one of Mike's clients. She was an elderly woman who obviously had some mental disorder. She could not remember simple things and was under a doctor's care.

 

  Back at the office, Greg asked Mike how he ever got her on that policy, which was issued only six months previously. "I would not have even attempted it, given her medical situation," stated Greg.

 

  Mike replied, "I simply stated what she told me. If she didn't say it, I didn't write it."

 

  On two other occasions, Greg found similar circumstances in Mike's business. Greg voiced his concern to Mike: "You know those people won't be covered if something comes up. The company will simply rescind their policies."

 

  Mike: "You worry too much."

 

  It became obvious to Greg that Mike did not intend to change his practices.

 

  Since Greg is not involved and is behaving in a way that he perceives to be ethical personally, does he have any moral obligation to the clients of Mike?  Since Greg considers Mike to be a friend, does he have more obligations towards Mike or Mike's clients?

 

  Greg was still concerned so he went to his manager. The company's manager told Greg that it was not his concern as did several other coworkers. In fact, most people that he talked to within the company seemed to be viewing Greg as a potential trouble maker. Greg had heard about "whistle-blowers" and he knew he could be putting himself in a precarious position with the company if he became too vocal.

 

  Are Greg's self-interests more important when no one really seems to care other than himself?  Is it the management's responsibility (rather than Greg's) to mandate ethics?

 

  On the surface it would be easy to say that Right is Right no matter what.  It is likely that most people would, however, suggest a different course for others than they would suggest for themselves.  Studies have shown that people are more likely to voice ethical behavior than follow it.

 

  The truth is, our identity is established by our actions (a liar is known for his lies; a thief is known for his stealing, etc.).  A common pitfall to proclaiming ethics, but not following them, is that an identity is established.  When we allow ourselves to be defined by whatever we happen to fall into, that in itself is a choice.  Who we are is established by what we do and even by what we do not do.

 

  Who we become is a gradual thing.  Seldom are we formed by one single experience although one single experience, if great enough, can change our direction or focus in life.  Our "becoming" is a gradual and natural thing.  So gradual that people seldom notice what is happening themselves.  Without even noticing it, one can slip into a pattern of behavior which ends up being the ultimate basis by which we are judged by others.  Therefore, a code of ethics must be a daily goal that we deliberately choose to follow.

 

  We have all known someone who allowed their job to be the ultimate basis for who they were.  When retirement comes for those individuals, they have nothing in their life to fill the void left by retirement.  These individuals spent so much time becoming who they were within their jobs that they neglected to define who they were away from their work.  Sooner or later all of us will lose our jobs.  While we hope it will be through retirement, it may also happen due to lay-offs or other means.  When a person's identity (which includes ethical behavior) is wrapped up primarily in their work, an extreme crisis may occur when that work place is no longer there.  Men seem to be particularly vulnerable to this situation and often die shortly after retirement.  One wonders if those men simply could not find a reason to continue living without an identity they were secure in.

 

  As we stated, being an ethical person IS hard work.  However, when a person learns to base who they are upon a distinct code of ethics, it is unlikely that their jobs will completely define who they are.  This may allow an individual to become more secure about him or herself.  When success in the workplace means compromises in personal ethics and values that often mean that we are allowing our employers or coworkers to define who we are.  There is a song which states "You've got to stand for something, or you'll fall for anything."  There is a great deal of truth in that lyric.

 

  A sociologist, Irving Goffman, touches upon a troubling image of those who establish themselves only through their work identities.  Mr. Goffman calls those who aspire to be successful at any cost as "con artists" because they do not learn the business skills but rather, they develop a way to act and present themselves in a manner which is convincing to others.  In commissioned sales this may be especially true.  Since commissioned salespeople are not guaranteed a paycheck each week, it becomes very important to present a professional and appealing image to others.  Of course, the ideal way to do this is through education, product understanding, communication skills, and just plain hard work.  Many take the short cut and, as Irving Goffman states, chooses to develop an outward appearance of education and understanding (when none actually exists).

 

  Sales meetings often point out that sales people are, in some ways, actors and actresses.  The same, of course, may be said for most people.  Each of us generally desire to be accepted by those around us.  In view of this desire, we tend to put on the "front" that we feel will be accepted by those in our company.  Even such things as politeness may, in some ways, be described as "acting."

 

  Each of us does this on a day-to-day basis because our ethical standards do not allow us to be unkind to others.  How do we draw the line between being a graceful "actress" or "actor" and being a "con artist?" 

 

  In Arthur Miller's famous play, Death of a Salesman, the main character, Willie Loman, believes that the secret of success lies in the salesman's personality.  This might involve many aspects of the personality, but it comes down once again to acting.  Being the person the prospective buyer wants the salesman to be.  If the buyer loves children, then the salesman loves children; if the buyer would like to travel, then the salesman either has traveled or wants to travel also.  Common ground, we are told, is vital to the sale.

 

  Being an actor or an actress, especially in sales, is a dangerous part to play.  Sooner or later, it is likely that the salesperson's true identity will be exposed.  The woman who tells the elderly client that she loves cats, too, will be caught smacking at the cat who attempts to climb on her lap.  The man who weaves a tall tell about his traveling experiences will say something that proves him to be a liar.  Sooner or later, our true motives will become obvious.  It is simply too difficult to keep what was told to who straight.  This is especially true in small towns where your clients often know each other and will compare notes.  Attempts to conceal our true nature or self will eventually be exposed (often by accidental slips of the tongue).  As the Bible says, sooner or later who we are "will be declared from the rooftops."

 

  It should be pointed out that it is possible to discontinue acting in an unethical manner, or "mend our ways" as it is often referred to.  It is never too late to begin to act in an ethical way.  In fact, John Newton, the man who wrote one of our most famous songs, was the captain of a slave ship.  As he came to realize that slavery was wrong, he used his experiences to bring this same understanding to many others.  The song written by John Newton was Amazing Grace.  Knowing this, the words of the song gain a greater meaning:

 

Amazing grace, how sweet the sound

that saved a wretch like me;

I once was lost

but now I'm found;

was blind, but now I see.

 

  Of course, the most important reason to be ethical is not hard to understand, we are a reflection of our lives, our families, our community, our profession and, of course, ourselves.  Our children will copy us (that is hard to believe during their teenage years, but it does happen), our families and our communities will be affected by our actions and we, ourselves, must live with who we are yesterday, today, and tomorrow.  In fact, those around us, including our coworkers, are affected by our values (ethics).  Just as a follower may follow the cheater, he or she may also follow ethical behavior.  When you define the "inner" character as someone you are proud of, it will show in your daily behavior which includes your work.  This will bring self-assurance which will ultimately benefit you in many ways, including financially.  Personal integrity radiates confidence, and everyone prefers to deal with people who seem confident.

 

  A few years ago, the Howard Fischer Associates (one of New York's top executive search firms) conducted a survey of CEOs of the top one hundred companies in the New York area.  They were looking for traits which were valued most by the leaders.

 

  Of course, honesty and fairness were ranked at the very top.  These are the other character traits which were listed:

1.      Never compromise on matters of principle, nor standards of excellence, even on minor issues.

2.      Be persistent and never give up. 

3.      Have a vision of where you are going and communicate it often. 

4.      Know what you stand for, set high standards, and do not be afraid to take on tough problems despite the risks.

5.      Spend less time managing and more time leading.  Lead by example.

6.      Bring out the best in others.  Hire the best people you can find, then delegate authority and responsibility, but stay in touch.

7.      Have confidence in yourself and in those around you, and trust others.

8.      Accept blame for failures and credit others with success.  Possess integrity and personal courage.

 

  There is much so-called "sound" advice circulating for achieving financial and business success.  We are not here to say whether that advice is accurate or not.  It is true, however, that before accepting such advice, one might wish to consider what they actually wish to accomplish during their lifetime.  So often individuals lose track of their true goals (such as rearing happy children, writing a book, etc.) and become side-tracked with making a living in a manner that makes their boss, spouse, or coworkers happy.  When an individual loses track of their own goals, they are more likely to become followers rather than thinkers.

 

  Often motivational speakers are concentrating on goals that may actually be secondary to our main desires.  Yes, we all want to make a good financial living for ourselves and our families.  Yes, we want to be able to plan ahead for a comfortable retirement.  The question is, do we want to make that money at the expense of ourselves and our families?

 

  In an effort to become the super salespeople that the company, agency, or management staff promotes, people tend to embrace a variety of role models and skills.  That might include optimum time usage, aggressive sales techniques, becoming a superb team player, or motivational skills.  Certainly, all of these avenues can have advantages in one way or another.  Each method does have its place in the business and sales world.  Usually, each method that is promoted contains a certain amount of useful advice because they contain certain truths.  That is precisely why these books tend to sell well.  Even so, these methods, whatever they may be, also have their limitations.  The balanced person will watch for the truths in the selling methods, but they will also recognize the limitations.

 

  Agents have complained that there seems to be something "missing" even when they have followed the methods precisely.  Very often the why of our activities is simply not addressed.  Why are you selling insurance: only to make a living?  Do you understand where a product fits?  Does the product do an outstanding job of meeting another's goal?  If not, you have likely missed the why of your job.  It is in the why that ethics or values often play an important role.  When an agent does understand the role they are playing in another's life, the satisfaction gained goes hand-in-hand with ethical behavior.  Clearly defined goals and purposes are essential if people are to understand what their lives in general and their work in particular are really all about.

 

  It seems that psychology is the current rage in selling.  While it may give an air of being scientific, often the "psychology" listed is more apt to resemble manipulation.  When such techniques are encouraged, individual employees may feel inadequate to challenge the validity of them.  This may especially be true if the concerned salesperson is not the "star" of the agency.  Often, an individual may feel their job is not secure enough to question the techniques being pushed on them by their employer.  Or, if the salesperson is not the super producer of that agency, they may simply feel that they have not earned the right to speak out.  In actuality, ethics belong to everyone, not just the superstars of sales.

 

  We are often told that merely feeling very good about ourselves will accomplish much in the sales field.  There is certainly much truth to the concept that self-worth is tied in to many of our successes in life.  In fact, low self-esteem may be tied to many of the under-achievers in our country.  However, high self-esteem in itself will not accomplish anything.  It takes much more than that.  Some of the most effective workers in the world are the Japanese people.  Yet personality tests have revealed that the Japanese people traditionally have very low self-images.  They are often depressed because they do not feel good about themselves.  Self-esteem is important to have for many reasons, but it is not likely to ensure economic success.

 

  Early in the new agent's selling career, it is common for someone to suggest that a picture of a material goal, such as a speed boat or fancy car, be placed on the dashboard of the agent's car.  The theory is that constantly viewing the picture will push him or her to greater selling heights.  Most agents actually report that it reminds them of their failures.  Again, this avenue tends to bypass the why of insurance sells and instead concentrates on viewing the consumers as merely a path to financial gain.

 

  It has become commonplace for insurance companies and other industries to shower their salespeople with prizes, plaques, and medals for selling their products.  It seems that some companies believe their employees will work only for material gratification.  There are those who believe that attempts to build self-esteem in the work place will result in successful (financial) payoffs for the company.

 

  Sometimes this belief can cause problems.  Employees may begin to do their work for the wrong reasons.  Their "ethical compass" may become misdirected.  When self-esteem is tied only to financial rewards, the why of the work can again become lost.  Of course, financial rewards are essential, but when ethical behavior is not tied into those financial rewards, many negative circumstances can develop.

 

  Totally fulfilling work probably does not exist.  For many people, commissioned sales are something to be feared.  It is probably safe to say that some amount of high self-esteem likely exists for those who enter the commissioned sales field.  A person must feel they can succeed even to enter into such work.  This brings us to another area of ethics.  In this case, it involves those who recruit commissioned sales staffs.

 

  Nearly every insurance agent has, at some time or another, had a company or person promise the world.  The majority of America's workers do not enter commissioned sales.  There must be a reason.  If financial success were so easy, everyone would be doing it.  This sales technique (the company or person is selling the insurance agent on their products) is often referred to as the "chandelier in the barn routine."  This term comes from the old story that used to be told to unsuspecting recruits that one of their salespeople made so much money he had nowhere to spend it.  Therefore, the salesperson spent the excess on a chandelier which he hung up in his barn.  Agents are told that some individual in the company or corporation is currently earning thousands and thousands of dollars.  The likelihood of everyone doing so is expanded upon.  Stars fill the prospective agent's eyes.  While generous earnings may well be possible, the stories are expanded to unrealistic dimensions.

 

  Can ethics be a part of promotional selling?  At what point does reality need to be interjected?  Should the fail rate be stated? 

 

  It might be easy to state that the "dark side" should also be stated, but would you expect that in other industries?  Can you imagine a new car salesman saying:  "Oh, sure, the car looks great now, but it will not in a few years.  There will be wear and tear and the paint job will dull.  Five years from now you'll be glad to just get rid of the car."  Certainly, prospective agents need to hear about the sides of insurance sales; not just the financial dreams.  The difficulty lies in regulating such things.

 

  It is common for agents to say that they would never have gotten into the business if they had known everything.  And yet, now that they are in the business, they do enjoy their work.  There are many aspects of commissioned sales that can scare a person out of ever entering it.  Should these aspects be discussed with new recruits?  Does avoiding the total picture set many people up to fail?  If a realistic picture had been presented, perhaps many agents would have done better since they would not have felt that they were failing personally.  There are no clear answers to these questions, but certainly truth should play a role in any sales presentation.

 

  Few, if any, jobs are totally satisfying.  Certainly, it is desirable to find fulfilling work, but most things in life is a mixture of things.  In other words, there are times that the job seems extremely fulfilling and there are other times when the job seems absolutely terrible.  Even fields of work that seem to be glamorous to others generally carry with them a certain number of negatives.  Even jobs that promise excitement carry stretches of boring mundane tasks.

 

  And yet, promotional advertising is all around us.  As viewers of this, we must be aware that glamour and excitement also carries simple hard work and frustration.  Look at the ads for joining the armed forces.  These ads show handsome men flying planes or jets, standing on the decks of mighty ships, or visiting exotic foreign places.  They do not show kitchen duty, strenuous marches, or other mundane tasks.

 

  Even the ads for smoking came under fire for such one-sided promotional activity.  We felt that cigarette companies, and lately alcohol companies as well, should not show smoking or drinking as glamorous or exciting.  The rugged cowboy who always lit up a cigarette now has cancer.  Alcohol companies show young beautiful people drinking, laughing, and having a good time.  Alcohol companies do not show the car accidents caused by drunk drivers.

 

  So, the question still lingers:  Can ethics and promotional campaigns be integrated?

 

  It would be wonderful if every industry were blessed with an individual whose inner greatness or qualities were able to inspire those around them with their vision and energy.  In truth, few industries are graced with such people.  Those people who do possess such qualities often have no desire to be promotional tools for businesses.

 

  Perhaps one of the major reasons why ethical behavior is something that must be constantly stressed is simply the fact that being ethical is hard work.  Even though it may seem to come effortlessly to a few, the majority must make a conscience effort to be ethical.  Ethical people typically have a moral reason for being such.  Some might tie it in to their religion (in fact, the majority of people who place high regard on ethical behavior state their religion as a major factor) while others simply feel strongly that practicing ethical behavior is best for themselves and their families.  We also find that people who consider ethical standards to be a high priority also value such personality traits as patience and kindness towards others.  In fact, whatever the career line, the most successful salespeople state that patience and kindness is necessary in their line of work.  Some state this quality as a "love of people."  Top-notch salespeople do, of course, develop the necessary skills for their jobs, but their love of people motivates them to do a better job than the average person.  They tend to "go the extra mile" for their clients’ even when that extra mile does not overtly bring them any financial rewards.

 

  An individual who is naturally kind towards others tends to have a sensitive awareness of them.  Kindness generally takes into account how another person might feel as a consequence of what we do.  That is not to say that a kind person always sympathizes with others in every situation.  Sometimes being kind means withholding sympathy.  It does mean that empathy must be involved.  Let us look at the difference:

 

Sympathy (noun): (1) fellow-feeling; compassion.  (2) condolence.  (3)  agreement; approval; accord.

 

Empathy (noun):  (1) the complete understanding of another's feelings, motives, etc.

 

  There are many differing views regarding the need for sympathy or empathy.  Sympathy may not necessarily help a person and may, in some cases, increase the problem that exists.  Empathy, on the other hand, tends to be aimed at correcting a given situation, and may be what is sometimes described as "tough love."

 

  When a person is discharged from a job, personnel managers report that they often try to soften the blow by being less than honest about the person's shortcomings.  In addition, they often do not tell the next potential employer about the problems that existed.

 

  Such evasions of the truth may do more harm than good.  Unless the person knows and understands the deficiencies and mistakes that led to the loss of his or her job, those deficiencies and mistakes cannot be corrected and are likely to be repeated.  Certainly, kindness needs to be used when relaying the information, but honesty is still the best option.

 

  In the May 1993 issue of the Ladies' Home Journal magazine, reporter Leslie Lampert did a story on overweight people.  To do the story, she was fitted with a specially made "fat suit" which instantly made her appear to add 150 pounds.  Most of the people she encountered made no attempt to help her in any way.  In fact, most people treated her with disgust and sometimes even open antagonism.

 

  One particular person, however, knew how to be both kind and ethical (honest).  She was a hairdresser that Leslie Lampert went to while in her fat suit.  The hairstylist, who was very thin, gently explained to Leslie that the hair style she wanted would not be right for her ample figure.  Leslie stated that she was honest, but not insulting.  Rather than do a hairstyle that would not aid her appearance, the woman used honesty and caring to suggest a style that would be right for her.  Certainly, the hairstylist was probably very good at her trade since she understood what style would work best.  It goes beyond that, however.  She was also concerned about her clients and their well-being.

 

  A person who does not know what changes need to be made will never make any changes at all.  As a result, the same mistakes will be repeated over and over again.  The truth in such a situation may leave you disliked by the person, but it may also lead that person (such as Leslie as an overweight woman) into the possibility of success.  Sometimes being liked is simply not as important as being kind and honest.  It is not always kind to deny the truth to a person who truly needs to hear it.

 

  The next question:  Are you being kind in telling someone the truth, or are you getting some type of power or pleasure personally by pointing out their failure?  If an agent is aware of another agent that is not competent, it is important that someone in authority be made aware of the situation.  At the same time, the person reporting the situation should not be coveting the other agent's business.  Unfortunately, in a commission setting, the authorities generally assume that the agent reporting the incompetence is actually trying to gain a business edge and may not take the report seriously.

 

 

Learning to Be Ourselves

 

  In sales, insincerity (which is, after all, lying) can reach epidemic levels.  As previously stated, we are often told to "be just like the client."  If the client gardens, then we garden; if the client vacations in the tropics, so do we.  We laugh at the client's jokes even when they insult us or others; we pretend to completely like those that we can barely stand.  We do whatever is necessary to get that signature and check.  Sometimes what is considered necessary by management, or our peers, is so against our feelings of right and wrong that we do not enjoy the sale or the commission.  We may end up depressed or irritable as a result.  The question:  Are there some sales that simply are not worth the price we pay personally and emotionally?

 

  Salespeople are traditionally thought of as untrustworthy.  This is unfortunate since most are good honest people.  Why do you suppose this image developed?  Most of us want to be trusted; we want people to believe we are as good as our word.  If we say something is so, we want others to believe it.  To be viewed as a person of integrity is not only important in business, but in our personal lives, as well.

 

  The Amish people hold their word in high regard.  They refuse to sign written contracts because they feel that, as Christians, their word should be good enough to guarantee any agreement that is sealed with a handshake.  The Amish are known for their strength of character; whatever is promised will be delivered.

 

  Unfortunately, there are few groups of people or organizations that are honored with such high reputations.  As insurance agents, we commonly call on people who feel that other agents before us have misrepresented products, companies, or services.  In fact, agents themselves have sometimes been misled by the companies they represented.  The more we are in the business world, the less we find ourselves trusting others.  We are warned daily to "read the small print."

 

  Often, problems occur not because something was specifically stated, but because something was implied.  Salespeople who allow their clients to assume something that is not true will be viewed as badly as someone who openly lied.  Misleading another, whether that is an insurance agent misleading a client, or an agency misleading their agents, will eventually come face to face with credibility problems.

 

  Implying that which is not true is a form of manipulation.  People may make serious mistakes financially on the basis of what is implied.  In some cases, this can cause serious legal problems for the agent.  More often, it simply means that people learn to mistrust them.  In fact, insurance companies themselves may "red flag" some agents if problems of "misunderstandings" seem commonplace in their client's applications.  If an agent continually seems to leave out pertinent medical information, the agent may say that he or she asked the medical questions; the consumer simply failed to understand them.  If it happens once or even twice, the insurance company will probably take the explanation, but if it happens repeatedly the insurance company surely will not.

 

 

Due Diligence

 

  It is common for an agent to go to work for an agency and simply accept whatever companies and products are given to them to work with.  While we would like to assume that an agency has done their homework, this may not always be the case.  In addition, it is possible that the agency viewed the companies and products only from a profit point of view.

 

  What responsibilities actually do fall on the selling agent?  The answer to this question will certainly vary depending upon who is asked.  As little as ten years ago, due diligence was something done by broker-dealers, people selling securities and by some home offices.  Seldom was due diligence thought to be an agent's responsibility.

 

  In more recent times, agents are being told that due diligence is their responsibility.  This statement is often the result of court actions.  In other words, it is now being legally determined that individual agents are responsible for the recommendations they give, the products they sell, and the companies they represent.

 

  What does the term, due diligence, actually mean?  For the agent, due diligence is the analysis of a particular company's products, performance, and financial standing.  Where life insurance is concerned, this is often done to determine whether or not there is a reasonable expectation that the illustrated values presented can actually be achieved.  Life insurance is, in some measure, the business of making long-term promises to clients.  It is vital to those clients that the company be able to keep those promises they are making.  Due diligence is the agent's analysis of whether or not the company can, in fact, keep their promises.  The term, due diligence, is primarily derived from the securities industry.

 

  For the insurance company, due diligence is an ongoing process which insures that pricing objectives are being realized, and that integrity and consistency of internal procedures are being maintained.  It is working with the agents and agencies, as well as their policyholders, to preserve fairness in all parts of the operation.  An insurance company that is concerned with due diligence will treat its sales force and back-up members as well as they treat their policyholders.  Company due diligence also means making investments that are sound and prudent.  For life insurance companies, due diligence is not a new concept, even though it is new to many agents.

 

  It must be noted that the life insurance industry has moved their product design away from fully guaranteed values and benefits towards a dependency on current, sometimes more favorable parameters.  This means more risk has been taken on by the consumers.  The factors more often used these days also tend to be more volatile.  In many cases, only the strength and the integrity of the company involved can ensure that projected, non-guaranteed elements of the policy are actually realistic.

 

  As agents and the general public have become more educated on the variety of options available, insurance has seen a change in how it is perceived.  While price has always been considered, additional elements are now commonly looked at as well.  Consumers want to know if the company they are considering can manage its overhead expenses, mortality expenses and investment returns in a way that allows the company to make good on its promises in the contract.

 

  In addition, the role of the agent has changed.  Whereas the agent was typically thought of as only the salesperson, consumers now consider the agent to be someone who must give reliable information for the good of the policyholder.  We no longer accept the view that the agent represents only the company.  This change in the general perception of an insurance agent places greater responsibility, both legal and ethical, on the agent.

 

  In the public's view, the level of service and quality of the advice given are linked directly to the insurance company and that company's performance.  It must be noted that practicing due diligence makes sense from many standpoints, one of which is financial protection of the agent, as well as the consumer.  When an agent takes the time to investigate his companies (and document that investigation), he or she is also protecting their own financial future.  Lawsuits are common and it is reasonable to believe that even a good agent can experience one.  Due diligence is, of course, an ongoing process since companies can and do change how they operate.  Due diligence might be considered as a method of self-protection through knowledge.

 

 

  Many agents groan when due diligence is brought up.  They picture hours of work put into a schedule that is already difficult.  It should brighten their day to know that there are more answers than one might imagine at their local library.  A morning spent looking up the companies they are representing, or are considering, is a morning well spent.  There are several reasons to do so:

1.      To prevent lawsuits from angry consumers who feel they have been misled.

2.      To protect the trust they have spent hours building up with their clientele,  and

3.      To determine if the people associated with the companies they sell for have the level of integrity desired.

 

 

  If an agent bases his or her company affiliations on commission levels, leads provided, or where the next convention will be held, he or she is in for a few surprises down the road.   An agent should request a copy of the insurer's annual statement and pay particular attention to the interrogatories, because they are brief and speak to short-term changes from the previous report.

 

  An agent needs to begin his due diligence process by gathering information on the major components of the company from as many sources as possible.  This would include seeking information directly from the company.  In fact, this is probably the first place to seek information.  Generally, such information is readily available.  The agent should not overlook another simple way to gather information: to ask questions.  Communicate with one’s immediate manager or regional manager, the home office (especially the underwriting department), and even the company's competitor.  Anytime an insurance company seems reluctant to provide information to their own agents, a red flag should go up. 

 

  Often, an agent can learn more than you might imagine from simply asking other agents who have been with the insurance company for a relatively long period of time.  Find out about the speed of the company's claim service since this is often an indicator of company solvency.  Find out if commission checks seem to be consistent, correct and on time.  If a financial error is made, how long does the company take to correct it?

 

  The agent should collect the three most recent sets of financial statements and study them.  Does the company seem to be making excessive profits?  Does the company seem to be making minimal profits; perhaps too little to ensure continuance?  Compare the surplus in relation to the amount of business being produced.  Ask the state Insurance Department to see if there are any watches or cautions outstanding.  How many complaints from consumers has the company experienced in the past year?  You may also wish to look at complaints over a three-year period to see if any pattern seems apparent.  The agent may also want to watch for any shifts in the management of the company since this can change the philosophy of the company's operations.

 

  Once a measure of information is gathered, the agent must assimilate it in a manner which is easily understood and assessed.  There are several ways to assess this information, but often the agent simply looks at it from the standpoint of "Does it feel right?"  With so many carriers to choose from, there is no need to represent any carrier that does not feel comfortable.

 

  Other sources of information that the agent should consider are the rating services, such as A.M. Best, Weiss Research, or any other reliable service.

 

  Rating services have not always given the public indications of trouble in a timely manner.  Even so, it is important to seek out the information that they offer.  A.M. Best states that the primary source of the information presented in their publication is obtained from each insurance company's sworn NAIC annual financial statement as filed with the Insurance Commissioner of the state in which the company is domiciled and licensed to conduct business.  These financial statements are prepared in accordance with statutory accounting requirements established by the NAIC.

 

  It should be pointed out that the ratings still reflect a certain amount of opinion regarding each company's financial strength and operating performance.  A.M. Best is certainly not attempting to give any type of warranty.  Neither do rating companies give any recommendations for any particular companies.

 

  The objective of the rating services is to evaluate the factors which affect the overall performance of the insurance companies.  By doing so, they provide their opinion of the company's financial strength, operating performance, and ability to meet its obligations to the policyholders.  The procedure, according to A.M. Best, includes quantitative and qualitative evaluations of the company's financial condition and operating performance.

 

  As we all realize, evaluating the financial condition of a company is subject to variations depending upon the person or company doing the analysis.  This is especially true when it comes to evaluating insurance companies because so many of their assets are interest and economic sensitive investments.  Many of these investments are based predominantly on actuarial projections of future claim payments.

 

  It has become increasingly difficult to predict the amount of loss reserves that must be held in order to maintain financial security.  This is especially true for the property and casualty companies because of liberalization of insurance contract interpretations and the expansion of theories of tort liability.  The insurance companies have the potential for much larger losses in today's world than was present in the past.

 

  In the life insurance industry, the cash flow and liquidity necessary to meet policyholder obligations has also seen an increase in the complexity of investment-oriented life and annuity products, interest rate volatility, the reduced certainty of future cash demands and growing policyowner and public perception.  Today's world is simply more complex than was yesterday's.  The banking system's financial problems have added additional stress as policyholders feel less secure about major institutions, including life insurance companies.  All of these factors have affected even well-established major life insurance companies (some of which have ended up on the "watch" list).

 

  In the end, only each individual insurance agent can make the determination regarding which companies and products seem secure in today's financial environment.  The determinations made will affect every consumer who places his or her trust in that agent.

 

 

 

This concludes your reading material.

 

 

 

 

 

 

United Insurance Educators, Inc.

 

Email: mail@uiece.com

(253) 846-1155