Ethics and Professional Practice
Core concepts
Ethics questions reward the conservative, documented, client-first answer. Know the producer's duties: suitability, disclosure of compensation and conflicts, confidentiality, timely service, and accurate presentation of policy features. Distinguish unfair trade practices: misrepresentation, false advertising, twisting (misrepresenting to induce replacement), churning, rebating, defamation, coercion, and unfair claim settlement. Replacement rules require notice and disclosure to the client and the existing insurer. Licensing, appointment, continuing education, recordkeeping, and AML and GLBA privacy duties are all fair game. Senior and vulnerable clients raise capacity, undue influence, and power-of-attorney issues.
Traps
Suitability is not the same as a fiduciary standard-know which applies. Rebating is illegal in most states even when the client requests it. Never sign a client's name, backdate an application outside state rules, or accept premium for a product you are not appointed to sell. Confidentiality has narrow exceptions: client consent, legal process, and regulatory inquiry. Commissions should be disclosed when required, and replacements must be documented.
Rule of thumb
Use the front-page test and the documentation rule: if it is not in the file, it did not happen. When a request is borderline, disclose, document, and escalate.
Worked example
A client asks you to split your commission with him to close the sale. Decline: that is rebating, an unfair trade practice that can cost you your license.