BCP CH 9 Ethics

WHAT IS ETHICS?

• Definition:
  • A branch of philosophy investigating behavior.
  • Seeks to understand how people should behave in various situations.
• Applied Ethics:
  • The ability to apply moral beliefs about good and bad to daily situations.
  • In business, it reflects how dealings are conducted and is foundational for trust and cooperation among associates.
  • Failure in ethics leads to collapsed deals, intolerable environments, and lack of trust.

ETHICS IS NOT COMPLIANCE

• Ethical behavior transcends mere legal obligations and requires individuals to apply moral principles in practice.
• Key aspect: Ethical behavior requires individuals to act based on what they believe is right, not just what the law prescribes.

IMPORTANCE OF ETHICS IN THE INSURANCE INDUSTRY

A. Insurance Business Is Based On Trust

• Clients face difficulties measuring the value of insurance products due to complex policy wordings.
• Ethical sales practices are crucial for clarity and understanding, helping clients avoid financial distress.

B. Public Image

• The insurance sector serves the public good; unethical actions can damage the industry's reputation and public trust.

GENERAL ETHICAL PRINCIPLES

• Excellence: Striving to be outstanding; unethical gains lead to lost reputation.
• Trustworthiness: Reliability is essential, as agents must fulfill their responsibilities ethically.
• Honesty: Being truthful, fair and informing clients without deception.
  • Ex: Misleading clients about policy exclusions undermines trust.
• Integrity: Doing the right thing despite risks; integrity involves risk-taking for ethical behavior.
• Caring: Motivated by the desire to help clients manage risks and ensure security.
• Selflessness: Putting others’ needs before one’s own; ethical agents find success through serving clients' best interests.

COURAGE IN ETHICS

• Courage is vital for confronting unethical behavior, even at personal cost.
• Ethical dilemmas often require standing firm against client or colleague pressures.

BENEFITS OF ETHICAL BEHAVIOR

A. Self-Respect

• Ethical individuals prioritize self-respect over rewards; they act because it is right.

B. Freedom From Fear

• Honest agents need not fear audits and gain trust from clients, boosting self-esteem.

C. Professional Recognition

• Ethical behavior can lead to career advancements and professional acknowledgment.

D. Client Relationships

• Trust leads to ongoing business and referrals; satisfied clients form the backbone of a successful career.

UNETHICAL ACTS IN INSURANCE

• Examples include misrepresentation of coverage, criticizing competitors, unauthorized alterations of forms, and fraud.

Specific Practices:

• Misrepresenting Coverage: Clients lack knowledge; misleading them is both unethical and ignorant.
• Undermining Competitors: Critical behavior reflects poorly and is unethical.
• Fraud: Any illegal activity like cheating, stealing is unacceptable.

Professionalism in Insurance

• Characteristics of a professional include dedication to client welfare and ethical service provision.
• Standards must meet laws and codes, ensure transparency in practices, and prioritize continuous education.

SINGAPORE GENERAL INSURANCE CODE OF PRACTICE

Goals**:

1. Establish clear standards for insurers to improve client trust.
2. Ensure insurance practices offer transparency and understanding to policyholders.

• Insurers must adopt these standards to enhance public relationships and comply with regulations.

PERSONAL DATA PROTECTION AND CYBER HYGIENE

A. What is Personal Data?

• Data relating to identifiable individuals, protected under the Personal Data Protection Act 2012 of Singapore.

B. Cyber Hygiene Guidelines

• Best practices that include strong data protection measures and cybersecurity protocols to protect sensitive information.