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Customer Service Focus

Ethical decisions and CSRs

Personal integrity plus an office system of ethics makes for consistency and confidence in one's actions

By Ruth E. Phillips, CIC, CISR

Ahot topic in the insurance industry today is ethics. More than 40 states require their licensed agents to participate in some type of ethics class in order to renew their insurance licenses. With all the focus on the agents, some may forget that CSRs face ethical dilemmas every day.

Ethics can be defined as a system of moral principles. Ayn Rand, Russian-American novelist, said, "Ethics is a code of values which guide our choices and actions and determine the purpose and course of our lives." Unfortunately, the field of ethics can be complicated because what may be legal may not always be ethical, and what we feel is right may not be ethical either. In addition, although some "edgy" decisions might seem great in the short run, in the long run they could be bad for business or cause the agency to lose clients.

Following are several examples of the dilemmas that CSRs continually face.

Scenario #1: In order to save an account, a CSR is tempted to overlook a fact that would increase the premium on a policy or cause the policy to be canceled. With every customer shopping every policy, keeping accounts on the books is important to agencies. The CSR decides to indicate to the company that a house is only four miles from a responding fire department instead of seven. Although the CSR knows that the company will charge a higher premium for the house if it is seven miles away from the fire department, he or she wants to write the business. The CSR may be able to issue the policy at the lower rate but, with today's market, underwriters are paying more attention to the details. Homes are inspected on a regular basis and companies are using GPS to determine the distance of homes from the city limits or nearest fire department. The CSR may find that the insured's premium will increase or the policy may be canceled after inspection.

Scenario #2: The automobile insurance underwriting guide states very clearly, "Do not bind new policies with physical damage coverage in the event of severe weather including any watches or warnings." The county is under a severe thunderstorm warning. No binding restriction came in on the fax machine or through e-mail, so the CSR goes ahead and binds coverage on a new policy. It is only a severe thunderstorm warning, and the CSR does not think the storm will do much damage. The CSR issues the policy and sends it to the company. The company then changes the effective date of the policy to 24 to 48 hours after the end of the warning, depending on their guidelines. In the meantime, the insured believes he had coverage once he signed the application.

Scenario #3: A teenager comes into the office with his mother to discuss auto insurance. He asks, "Will this policy cover my friends if they drive my car?" The CSR knows that there is coverage for a permissive user, but she sees the mother mouthing the word "No." The CSR thinks about telling the new driver that there isn't coverage for anyone but him on the policy to save the mother from worrying about who is driving the car. The CSR could take the time to educate the new driver about how insurance works, and how it would apply to a permissive user. Or the CSR could just agree with the mom and leave the new driver wondering exactly how his insurance works.

Scenario #4: Melissa is the CSR on a very large account. In the course of her duties, she learns that Bob, the insured, was involved in an accident involving a DUI. Later that evening, while Melissa is hanging out with friends, the accident comes up in conversation. It was on the news and everyone is talking about it. Melissa knows all the details and facts about the case. Should Melissa tell her friends the story? Would sharing details of her client's claim be an invasion of his privacy?

Ethics is a complicated topic because each person has his or her own moral system. Agency owners and principals can help guide their CSRs to make good ethical decisions and encourage them to be consistent with their professional behavior. In addition, every employee handbook should contain a code of conduct.

Several professional organizations have codes that stress ethical behavior. By belonging to these associations, members indicate that they agree with and will behave in accordance with the guidelines and codes of ethical behavior. Agency owners who are members of these professional organizations should include these codes of conduct in their agency employee handbooks. These should be reviewed with employees.

Every CSR should attend an ethics class—annually. Today, there is a wide variety of training available online, in a classroom, or even presented as part of in-house training. Agency owners need to make sure that their licensed agents are not the only ones receiving ethical training. Keeping CSRs informed on the importance of ethics and how it impacts their work will help all the agency employees make good ethical decisions together.

It starts at the top 

Agency owners and principals must always lead by example. The agency staff looks to them for leadership. If they see poor ethical decisions being made by management, they will conclude that ethics are not important in their office. The opposite is also true. If the agency owners and principals strive to always make honest and ethical decisions, then the CSRs will follow their example.

Ethical behavior is not always black and white. Some exceptions may be acceptable. For example, the "Smith Agency" policy is not to take customer payments outside of the office or beyond office hours. Owner Smith is concerned that there are too many ethical concerns. What if the employee fails to bring the payment to the office? What if there is no receipt? What if the customer gives the employee cash?

Susan, CSR of the Smith Agency, ran into one of their clients at the hospital. The client had a very sick child in the emergency room and knew that she would not be able to make it to the office the next day to make her insurance premium payment. Even though it was against the office procedure, Susan used her judgment and made an exception. She asked herself the following questions:

• Does the action comply with my own values?

• If this action made the front page of the newspaper, how would I feel?

• Is this legal?

• Would I want to be treated in this manner?

• Do I feel comfortable with my decision?

The next day, Susan documented her actions and mailed the customer a letter and her receipt. The letter explained the office policy of handling customer payments and offered her several options to pay her premium in the future.

While there are some "grey" areas in the insurance industry, there are some rules that cannot be bent. Those actions include any of the following if the action is:

• Illegal

• A violation of an agency contract or agreement

• Insurance fraud

• Willfully harmful to others

Ethical decision-making is in the hands of each individual. Although all persons need to have their own set of ethical standards and judge their own behavior by them, a work environment that promotes good ethical behavior, an employee handbook that contains a code of conduct, and supervisors who show through their actions good ethical judgments will help CSRs make correct, ethical work decisions. CSRs need to be held to the same ethical standards that agents are held to.

In one's own life or at work, when there is confusion about whether something is ethical or not, it is always better to be safe than sorry.

The author

Ruth Phillips is a licensed property and casualty agent and customer service representative for Morrell Agency, Inc., in Magnolia, Mississippi. She has received several industry awards, including the 2004 National CSR of the Year Award from The National Alliance for Insurance Education & Research and the 2006 PIA National Customer Service Representative of the Year. For more information on the CISR program, call (800) 633-2165 or go to


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