Never is it more important
to be completely open and transparent
There’s a reason people are cynical. They hate
to be lied to. And lack of full disclosure is the same as lying.
By Cheryl Koch, CPCU, ARM, AAI, ACSR, AFIS, and Mary Belka, CPCU, ARM, ARe, RPLU, CIC
In a world where divisiveness and cynicism seem to be the norm, it’s important to take a step back and talk about one of the most basic tenets of the insurance business: integrity.
Ours is a business of utmost good faith and fair dealing, and everything we do is somehow related to a promise. When an insurance company enters into a contractual relationship with a policyholder, it makes a promise to pay future, covered losses in accordance with the terms of the contract.
When an independent agent takes on a new agency client, he or she promises to do his or her professional best to help that client minimize the adverse effects of the myriad risks they face. When an agency enters into an agreement to represent an insurance carrier, the agency agrees to represent the interest of that insurer and to faithfully perform on the company’s behalf.
In any of these scenarios, a breach by one party could result in legal action by the other.
Keeping your word and doing what you say you’re going to do may not seem that relevant in a world that moves at the pace ours does, but these fundamentals are the very underpinning of every insurance transaction.
Marketing and selling. Insurance consumers need to be able to rely on the statements made by an insurer as to what an insurance contract may or may not provide. The property and casualty insurance industry is very competitive, despite the number of mergers and acquisitions seen in the last decade.
Everyone is vying for market share and trying to grow organically. But truth in advertising must reign supreme. Intentionally, or even unintentionally, misleading someone to enter into an insurance contract that is not beneficial to them is wrong, and any unethical behavior on the part of a provider portrays all of us in a bad light. This not only applies to an insurance company, but also to those of us who represent those insurers and facilitate the purchase of insurance contracts.
Never is it more important to be completely open and transparent.
Applications, proposals and acceptance. It has always been the case that insurers do not get to physically “see” the risks they have been asked to insure. The application for insurance becomes the primary tool of underwriting and must provide a clear and accurate picture of what is being insured, so that the insurance company can make an informed decision to accept, reject or modify the terms of the requested contract.
Statements made on most applications are considered representations and must be true at the time those statements are made. A misrepresentation of a material fact (i.e., one that would change the decision of the underwriter or would alter the terms of the policy offered) can void the contract.
Telling the truth matters. Likewise, agents and brokers must be accurate when offering proposals of coverage and should always offer to provide copies of the actual contract if requested.
Account service and support. There is nothing inherently improper about seeking assistance when agency or company staff are unable to provide service to policyholders. This has long been the case when disasters strike. Insurance company claims departments become overwhelmed and often hire outside adjusters to assist in handling claims.
Insurance company service centers came about as a result of agents seeking help from their carrier partners in handling inquiries outside of normal agency business hours. But one thing was clear from the start—the policyholders always knew who was actually providing the services and that their agent was ultimately responsible for the quality of that service.
Full disclosure is always the right decision.
Losses and claims. Unfortunately, despite our best efforts, there are going to be times when losses are not covered and claims get denied. There are no insurance contracts that cover everything, and yet that’s often what insurance buyers misunderstand.
When this happens, they feel the system has cheated them somehow, and they are often angry. This is the time when insurers and agents need to be at their empathetic best. Being honest about why a claim was denied is a requirement for an insurer, but merely a suggestion for an agent or broker.
Policyholders will be looking to their insurance representatives to explain exactly what the reason is and why it is ultimately in the best interest of everyone to deny coverage under certain circumstances. While it may not seem “hip” or fashionable, doing the right thing is as essential to the efficient operation of the insurance industry as breathing is to a human.
Most of us recognize that our industry faces a number of public relations challenges and we are not, for the most part, held in high esteem by the insurance-buying public. But despite what you hear in advertisements for legal services, we have not yet reached the point where there is inherent distrust in our industry’s ability to honor the promises it has made.
We must do everything we can to ensure that this never happens. The formula is pretty simple:
- Show up. Being present in mind and body still counts. In this era of remote work, recognize that being there still matters. Are there some things that can be handled from afar? Of course. But for other things, there is simply no substitute for physical presence.
- Be on time. There are few things as disrespectful as making people wait on you. Yes, unforeseen circumstances can always arise, but handle them appropriately. Using excuses like “traffic” or “I got a late start” are like shouting from the rooftop that your time matters more than everyone else’s.
- Be honest. There’s a reason people are cynical. They hate to be lied to. And lack of full disclosure is the same as lying. If people think you’re hiding something and not being completely forthcoming, why would they want to do business with you? They wouldn’t and they won’t—at least not for very long.
- Follow through. The world is full of people who will promise the sun, the moon, and the stars if that’s what it takes to make a sale. We call them “con men.” It’s really a form of narcissism—the only thing that matters is them. Most people can spot a con ten miles away.
It all starts with making and keeping promises and no matter the pace of daily life, this will always be what matters in the end when it comes to business relationships.
Do what you say you’re going to do, keep your word, and be unquestionably honest and forthright in your business dealings. These time-honored characteristics will always serve you well.
The authors
Cheryl Koch is the owner of Agency Management Resource Group, a California firm providing training, education and consulting to producers, account managers and owners of independent agencies. She has a BA in Economics from UCLA and an MBA from Sacramento State University. She has also earned several insurance professional designations: CPCU, CIC, ARM, AAI, AAI-M, API, AIS, AAM, AIM, ARP, AINS, ACSR, AFIS, and MLIS.
Mary M. Belka is owner and CEO of Eisenhart Consulting Group, Inc., providing management and operations consulting to the insurance industry. She also is an endorsed agency E&O auditor for Swiss Re/Westport. A graduate of the University of Nebraska, Mary holds the CPCU, ARM, ARe, RPLU, CIC, and CPIW designations.
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