While researching Nevada insurance agency law and duties, I came across a course entitled, Ethical Issues in Insurance. Two points of the course, which seem very relevant to most claims situations, involved the trust that policyholders place with agents and then the trust they place with the companies hoping they will be fully paid when a claim is presented.
Regarding the trust which occurs at the point of sale of the policy, the article noted:
Although modern insurance contracts are easy-to-read, it does not follow that they are easy-to- understand. Few insured’s read their policies; those who do, seldom understand what they are reading. Most people buy their coverage based on trust.
The second point quoted a leader of the insurance industry:
Much is made of the poor image of the insurance industry. Consumers normally do not think of insurance in a positive light. In his analysis of the insurance industry, Lawrence G. Brandon, CPCU, identified five weaknesses of the industry that lead to such a poor reputation.
- Lack of leadership allows insurance organizations to be driven by stockholder expectations rather than long-term goals.
- Poor communication about how the industry and its products are designed to work leads to misunderstandings.
- Lack of customer focus often leads to an adversarial position at a time the customer needs the product the most.
- Burdensome bureaucracies create a negative image.
- Unhealthy competition destroys the pricing integrity of the insurance product.
The course reminded me of a couple of prior posts I wrote about insurance industry ethics: The Professionalism and Ethics of a Property Insurance Adjuster, and Insurance and Insurance Claims Handling Involves the Public Trust.
The irony was coming across the course while researching duties of an agent who simply failed to do anything that was close to what was promised, and a very underpaid and delayed claim by a major personal lines insurance carrier, which should have much better claims processes focused on fulfilling what it knows it should do.