Ethics in Insurance

Ethics

What do you think of when you hear the word ethics? There are many times in our personal and business lives that we will face dilemmas where we will have to decide what is the right choice. Sometimes the unethical choice won’t hurt us immediately, but time passes things tend to catch up with everyone. What, then, is ethics? Ethics refers to well based standards of right and wrong that prescribe what we as humans ought to do, in terms of rights, obligations, benefits to society, fairness, or specific virtues. Ethical standards enjoin virtues of honesty, compassion, and loyalty.

State Farm is one of the most well known insurance companies in the world today. The company was founded in 1922 and is still going today. It is not just one company, but is built by subsidiary companies that offer both insurance and financial services, which was all form under State Farm Automobile Insurance Company. There are over 17,000 agents and 69,000 employees that serve nearly 73 million policies within the United States and Canada putting it at number nineteen on the Forbes 500 list of largest companies according to Business Ethics Magazine. According to Wikipedia.com State Farm didn’t get its name from offering crop insurance, but instead by providing automobile insurance to farmers. It was founder George J. Mecherle who believed that farmers drove less than city drivers and were involved in fewer accidents so they should be able to pay less for insurance. Since the company began it has expanded in to providing home owners insurance and life insurance. State Farm Bank, which provided banking and financial services has strived for perfection, and has become the sixth largest bank in the United States.

Because the Insurance industry is tied to Ethics, the Insurers often keep strict reins on any person who might mislead the public in any way. All of State Farms employees face ethical decisions everyday. It is an agent’s job to provide the best service for each client, but not to sell him or her anything that they don’t need. The National Association of Life Underwriters tries to secure and enforce the need for the fundamental rights of the client by having each agent taking their basic creed, oath and code was to uphold the laws and to act in the best fiduciary interest of the public. Since Agents and Adjusters are tied to state regulation, the people and the Insurers could lose their license and Certificate of Authority to transact business in their state.

When asking Joe Tabares, an independent agent, how he decides what products are best for his clients he responded, “You listen to what the customers needs are, but try to mention other products you have available. Some clients don’t know that we offer life insurance, stocks, bonds, investments, and sometimes we have to cross-sell some of our products, but be sure not to force them upon customers. If we sell them products that they don’t need now, then they won’t come to see us in the future. We are in large communities and small communities to be sure that we are able to service our customers, and be close to home. We really do strive each and every day to be a good neighbor.” When asking why he chose State Farm as an insurance company to work for his response was, “ I have been apart of State Farm my whole life. I have always carried insurance with them, they have always treated me with respect, but they have also been there as a friend. Anytime I walked into my agency I was always called by name, and never had a bad experience. Being a new agent, I don’t know all of my customer’s names, but I am working every day to give the