Ethical Obligations

I just completed a round of CE classes for my Florida insurance license and one of the courses reminded me of some of the statutes that codify the standards used to administer the state’s insurance laws.  The standards are expressed as a policyholder bills of rights, entitling consumers to all of the following:
  • the ability to obtain comprehensive coverage;
  • competitive pricing practices and marketing methods that enable them to determine the best value among comparable policies;
  • an insurance company that is financially stable;
  • insurance advertising and other selling approaches that provide accurate and balanced information on the benefits and limitations of a policy;
  • service by a competent, honest insurance agent or broker;
  • a readable policy;
  • an insurance company that provides an economic delivery of coverage and that tires to prevent losses; and
  • a balanced and positive regulation by the Department of Financial Services, the Financial Services Commission and the Office of Insurance Regulation.
These are great standards, and not  just for Florida.  All consumers, in all states, should enjoy the same protections.  I will post the Agent’s Code of Ethics in a later article, and also take a look at an agent’s fiduciary responsibilities and what these means for the average insurance buyer.

It is easy to forget that insurance serves a vital purpose in this society, especially in these days of endless financial misdeeds and scams.  And goodness knows, we all know an agent or two we try very hard to avoid whenever we can!  But imagine a society without insurance.  Could you get a car loan?  A school loan? Would you want to own a car if the liability for an accident you cause could not be insured? What about a house that could be razed by a fire in an hour?  Not insured…not rebuilt. What about your stuff? How would you pay your medical bills?  What about work injuries?  Business loans?  It goes on and on.

There is a wordy but apt definition of insurance that includes its social definition that I include here:
We should define insurance, then, as that social device for making accumulations to meet uncertain losses of capital which is carried out through the transfer of the risk of many individuals to one person or group of persons.  Wherever there is accumulation for uncertain losses or wherever there is a transfer of risk, there is one element of insurance; only where these are joined with the combination of risks in a group is the insurance complete. (American College, Fundamentals of Insurance)

Okay.  Insurance encourages peace of mind.  It pays losses.  It provides the basis for credit and encourages thrift (premiums are a kind of prepayment for potential losses, planning ahead if you will).  It provides investment capital and allows continuity for families and businesses,  promoting stability and sometimes, even hope.

When it’s done right.

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