Ethics 311 - Ethical Decision Making in Risk & Insurance
Ethics 311 tests how you reason through gray areas in underwriting and placement: conflicts of interest, confidential information, disclosure, and pressure to hit production numbers. Answers are judged on the reasoning, not just the conclusion.
Frameworks to name
- Consequences: which action produces the most good and least harm across stakeholders?
- Duties and rights: what is owed to the applicant, the insurer and the regulator regardless of outcome?
- Virtue: what would a prudent, honest underwriter do if the decision were public?
- Justice: are like risks treated alike, and are differences justified by actual risk characteristics?
Duties that anchor the codes
Integrity, competence, confidentiality, fairness, no misrepresentation or concealment, and disclosure of conflicts before a decision rather than after. Loyalty runs to the insurer and to the market's integrity, not to a producer's commission.
Worked example
A broker forwards a competitor's quote sheet, with the applicant's loss runs attached, and asks you to beat the price. The loss runs disclose a 2019 fire claim that the application omitted. Options: price against the competitor's number (improper), ignore the claim (misrepresentation), or verify the loss runs with the applicant and the prior carrier, underwrite on verified data, and tell the broker you will not use another insurer's confidential quote. Reasoning: the confidential pricing reflects the broker's breach and using it corrupts the market; the omitted claim is material, so verification and correction are required, and concealment itself is a moral-hazard signal. Document the exchange and the decision.
Traps
Treating "it is legal" as a complete justification; disclosing a conflict only after the decision; using confidential information as "background"; rationalizing non-disclosure as solely the applicant's duty; confusing loyalty to a producer with duty to the insurer.