Life Insurance Ethics and Professional Conduct
Life Insurance Ethics and Professional Conduct
The Life Insurance Ethics and Professional Conduct domain tests the standards expected of insurers, advisers and actuaries: integrity, objectivity, confidentiality, competence and fair treatment of customers.
Core rules and concepts
- Professional principles: integrity, objectivity, competence, confidentiality and professional behaviour.
- Treating customers fairly: outcomes include fair product design, clear information, suitable advice, good service and no unreasonable post-sale barriers.
- Conflicts of interest: disclose and manage them; do not let commission, gifts or career pressure override the customer's interest.
- Confidentiality: protect customer data during and after employment.
- Whistleblowing: report unethical conduct through proper channels and protect reporters from retaliation.
Worked example
An actuary is asked to use an optimistic lapse assumption to increase the reported profit of a unit-linked product. The change would make the product look more profitable than experience supports and could mislead policyholders and the board. The correct response is to refuse, document the technical objection, and escalate to the chief actuary or audit committee. The reasoning: objectivity and integrity require assumptions to be supportable, not chosen to produce a desired result. Compliance with the letter of the rules is not enough if the outcome is misleading.
Traps
- Equating ethics with legal compliance.
- Accepting gifts or hospitality that create a sense of obligation.
- Discussing customer information after leaving an employer.
- Failing to document advice and the reasons for a recommendation.
- Remaining silent about unethical conduct for fear of retaliation.
Key points
- Ethics requires both technically supportable work and fair customer outcomes.
- Conflicts of interest must be disclosed and managed, not ignored.
- Confidentiality continues after employment ends.
- Whistleblowers should use proper channels and be protected.
- Documenting reasoning is part of professional conduct.