I have long found it odd that insurance companies, especially policyholder owned companies such as State Farm, allow their lobbyists to lobby against the interests of their policyholders. A recent article, Does Industry Lobbying Pose Ethical Challenges?, by Dr. Peter R. Kensicki, CPCU, raises this issue. Kensicki is an insurance professor and has been in a leadership position on the ethics committee of the Society of CPCU and has written many insurance ethics articles.
The article was more of a review, but this is what he wrote:
Are there ethical obligations to communicate the insurance industry’s legislative and lobbying positions to your clients? Should insurers and agents impose their political views on customers because they believe the changes are ultimately in the best interests of clients?
The majority of those responding to these questions see no ethical responsibility to communicate legislative positions to clients—although many think it is a good idea to do so. However, the majority also believe lobbying should be done only when the proposed changes directly benefit clients.
A good summary was provided by an agent from Massachusetts, who wrote that “lobbying is part of the American way to educate elected officials on the effects of pending legislation. I have had many legislators tell me they cannot possibly know all about the issues with which they deal. If we in the insurance business do not help explain the ramifications of pending legislation, who will?”
This agent added that “we better understand the problems that can be created or solved with regard to insurance issues. It is always better to be part of the solution than to have to deal with the results after the fact. Conveying information to customers and getting them involved is ethical. They can decide whether or not to get further involved.”
In review, most believe there is no ethical obligation to communicate lobbying efforts and legislative positions to customers. However, there is an ethical and professional obligation to improve public understanding of insurance.
In addition, lobbying—if conducted in the best interests of customers—is ethical, but it wouldn’t hurt to keep clients informed and give them full and complete reasoning for positions taken on pending legislation.
I do not believe that most insurance executives want to acknowledge Dr. Kensicki’s last paragraph. My hunch is that he has a purpose in writing this article for an insurance industry magazine. Insurance executives should honestly explain to their customers what their lobbyists are doing –especially if the customers may consider the activities adverse to their interests.