The Counselor's Second Paycheck
A licensed Georgia insurance counselor, Ms. Boone, contracts with a 4,000-student school district to review its property and liability program for a flat $18,000 fee. Her report recommends moving the district's $25 million property schedule from Axis to a competitor because of claims-service problems. The incumbent insurer's regional manager, who has seen the report, offers Boone a $12,000 'consulting agreement' to review the district's five-year loss runs and 'help us understand the district's needs.' Boone asks you, the adjuster handling the district's two open slip-and-fall claims, for copies of the loss runs and claim files. The district's risk manager has not approved the arrangement.
1. What conflict does Boone's proposed consulting agreement create, and what should she do?
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The arrangement creates a direct conflict of interest. Boone was retained by the district to give independent advice about its insurance program. Accepting $12,000 from the incumbent insurer to review the same district's loss history and 'help' the insurer understand the account makes her simultaneously an advisor to the buyer and a paid consultant to the seller. Even if she believes she can remain objective, the appearance is damaging, and the district has not consented.
Boone should decline the insurer's consulting agreement or, at a minimum, make full written disclosure to the district and obtain informed written consent before accepting any insurer compensation. Given that her report recommended moving the account, accepting money from the incumbent is especially problematic. She should also review the terms of her counselor license and her engagement contract. A counselor who advises for a fee owes undivided loyalty to the client; accepting compensation from an insurer on the same matter is likely inconsistent with that role and may create licensing exposure.
2. Should you release the loss runs and claim files to Boone? What authorization do you need?
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Not on this record. The claim files and loss runs contain confidential insured information. Boone is the district's counselor, but her request is being made while she is considering a paid arrangement with the incumbent insurer, and the risk manager has not approved that arrangement or the release. You should not use the adjuster file as a conduit for information that may flow to the carrier's marketing or underwriting side.
Ask the district's risk manager to authorize the release in writing, specifying what may be provided and to whom. If the district wants Boone to have the loss runs for her counseling work, provide them to the district or to Boone under a written authorization that acknowledges the purpose. Do not provide claim files that contain privileged or confidential materials beyond the authorization. Document the request, the missing authorization, and your response. If Boone pressures you, escalate to your compliance area.
3. Boone says she will use the information only 'for the district's benefit.' Does that resolve the issue?
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No. A profession of good intent does not eliminate the conflict or the need for client authorization. The district, not Boone, owns the decision about whether its counselor may accept insurer compensation and share information with the incumbent carrier. Boone's statement also does not answer the confidentiality question: information given to an insurer's consultant can be used in ways the district did not authorize.
Tell Boone that you still need written authorization from the risk manager that identifies the scope and purpose of any release. Remind her, without giving legal advice, that she should disclose the consulting offer to the district and obtain consent or decline it. If she continues to request claim information without authorization, decline in writing and notify your manager. The key judgment is that loyalty and confidentiality are tested by the structure of the relationship, not by the person's assurances.