ETHICS:
THREE RULES FOR AVOIDING
TROUBLE
Regence
Rule 1. Know the Law
1.
2.
3.
Doing Business
The Requirements of a Licensed Profession
Providing Competent Advice on Regulated
Products
Finding the Law

Doing Business



corporations.utah.gov
sba.gov
Licensed Profession







www.insurance.utah.gov/legalresources
Title 31A, Chapter 23a—Insurance Marketing
R590-154 Unfair Marketing Practices Rule
R590-192 Unfair Accident and Health Income Replacement Claims
Settlement Practices Rule
R590-207 Health Agent Commissions for Small Groups
Bulletins
Utah Supreme Court Case Law: Unlicensed can’t collect?
Finding the Law

Providing Competent Advice on Regulated Products
 Carriers
& Plan Documents
 www.insurance.utah.gov
 Chapters 8, 22, and 30 of the Insurance Code
 http://cciio.cms.gov
Finding the Law

Tips
 Figure
out how subsections work together
 Make sure you have confidence in the sources you use
 Don’t be afraid to say what you don’t know or that you
need to look into the issue further to be able to give an
answer
Following the Law








Trust Account: Not reconciling, failure to have a trust account, misuse
of the trust account
Licensing: Agency not licensed-needs to be the same name as on
marketing material, appointed agents not the same as UID's records,
failure to update contact information within 30 days, failure to
disclose administrative action or criminal charges to the UID within 30
days.
Forgery: Producers signing for the applicant-policyholder.
Failure to disclose important information in relation to a policy,
example - hidden costs, penalties for early withdrawal, etc.
Selling a product that is unsuitable for the customer
Unfair inducement-offering something of value (over $3, soon to be
$25) with strings attached
Cross-border sales
Unsuitable annuities for the elderly (i.e., having the elderly in their
80's do a reverse mortgage to purchase an annuity)
Following the Law











Misrepresenting to the Insurer on the application.
Not doing a 1035 Exchange to replace an annuity.
Having the husband (licensed revoked) have his wife sign the
applications, when the husband actually did the solicitation
and made the sale.
Unauthorized insurance
Using unlicensed producers or CSRs
Delay of recorded documents,
Fraudulent insurance
Use of unlicensed TPA's
Entities selling without a Certificate of Authority
Operating un-licensed agencies
Failure to report criminal/administrative background
Following the Law





Ignorance
Fraud
Mismanagement
Incompetence
Failing to Put Client’s Interests First
Following the Law

General Rules for HB 333
 Benefit/Service
must be specified or directly related to
insurance contract
 Advice is generally permitted; Administration is not
except for COBRA
 Benefit/Service can only be given for a purchased
insurance product
 Social courtesy is permitted if not quid pro quo with
$25 safe harbor
Written Disclosure for
Noncommission Fee
31A-23-501 (2) A licensee may receive from an insured or from a person purchasing
an insurance policy, noncommission compensation if the noncommission compensation
is stated on a separate, written disclosure.
(a) The disclosure required by this Subsection (2) shall:
(i) include the signature of the insured or prospective insured acknowledging the
noncommission compensation;
(ii) clearly specify the amount or extent of the noncommission compensation; and
(iii) be provided to the insured or prospective insured before the performance of
the service.
(b) Noncommission compensation shall be:
(i) limited to actual or reasonable expenses incurred for services; and
(ii) uniformly applied to all insureds or prospective insureds in a class or classes of
business or for a specific service or services.
(c) A copy of the signed disclosure required by this Subsection (2) must be
maintained by any licensee who collects or receives the noncommission compensation
or any portion of the noncommission compensation.
(d) All accounting records relating to noncommission compensation shall be
maintained by the person described in Subsection (2)(c) in a manner that facilitates
an audit.
Staying Abreast of Law

Amends Qualified Plan for State Contractors





Aligns NetCare with Federal Reform
Responsibility for Conversion Notice has Shifted to
Insurers
Limits on Available Abortion Coverage


$1000/$3000 Deductible
60% Employer Contribution for HDHP
Life, Health, Fatal Defect, Rape or Incest
Grace Periods

Individual



Not in force during grace
Terminated as of last day paid in full
Group



30 days
In force during grace
Terminated as of last day of grace
Small Group Rating Changes


As of July 1

Gender can be factored in

Age band ratio will increase 6 to 1

Family ratio can be as high as 6 to 1
As of September 1, Five rating tiers will be
required

Employee only

Employee plus spouse

Employee plus one dependant, other than a spouse

Employee plus more than one dependant, other than a spouse

A Family, consisting of an employee plus spouse, and a dependant or
dependants
Exchange Changes

Exchange will only be available to small groups

Risk Adjustor will be limited to Exchange

NetCare plan will be available on Exchange
Federal Reform




Postponement Of Highly Compensated Employee Rules Until
Plan Year After Regulations Adopted
 Same Benefits
 Eligibility & Participation
 Reason to Grandfather
Litigation Over Mandate
2012 Election
State Income Tax Consequences Of Under 26
 Automatically Follow Federal Law—Like Utah
 Others Don’t
 Valuation of Coverage
 COBRA or Incremental
 Mandatory to Offer, Optional to Take
Rule 2. Don’t Settle for a Bad Decision

No one wakes up in the morning and decides to rob
a bank…
One thing leads to another…

Close Friend
 Incapacitated
Client
 Access to finances
 Financial Trouble
 Temporary Loan
 Lavish Lifestyle
 Problem Came to Light
Some things lead to even more…

Prosecuted a guy
 Created
a Ponzi Scheme
 Held himself out in the Community
 Took all $450K of working class couple’s retirement
 Said he could only get money back if no jail
Avoiding the Marginal Cost Mistake

How Will You Measure Your Life
 Clayton

Christensen
Marginal Cost Doctrine in Business
 Marginal



Costs and Revenues for New Investment
In this extenuating circumstance, just this once, it is
OK.
Life is a stream of extenuating circumstances
Holding to your principles 100% of time is easier
than 98% of the time.
A series of exceptions…

My Friend
 Lack
of financial controls
 A willingness to go beyond professional scope
 Justification based on immediate need
 Personal commitment to “pay back”
 One thing led to another

The Defendant
I
get what I want from whoever I want
 No one can hold me accountable
Playing Life Forward…


There are exceptions and then there are legitimate
choices between reasonably good, competing
options
Remains of the Day
 Butler
 Post
World War II
 His Choices

Family Man
 Replay
decision to go to Europe to advance career
Defining Moments


Joseph Badarocco
Right v. Right Decisions
 Reveal
our values
 Test our resolve
 Shapes our future

Mastering Moments
 What
matters most
 What should be done
 What is the optimum outcome
Organizational-level moments

Strategic sophistication of Machiavelli
 Strong
and prosperous organization
 Understand competitive environment
 Playing the role of fox or lion

Balancing and moderating ethos of Aristotle
Aristotle

It is the nature of moral qualities that they are
destroyed by deficiency and excess, just as we can
see in the case of health and strength. For both
excessive and insufficient exercise destroy one’s
strength and both eating and drinking too much or
too little destroy health, whereas the right quantity
produces, increases, and preserves it…
Aristotle

So it is the same with temperance, courage, and the
other virtues. The man who shuns and fears
everything and stands up to nothing becomes a
coward, the man who is afraid of nothing at all, but
marches up to every danger, becomes foolhardy.
Aiming High…



Avoiding Exceptions
Shaping Your Life Through Decisions Consistent with
Your Values
Not Settling for Second Best Outcomes
Abraham Lincoln’s Conderum



Team of Rivals, Doris Goodman
Divided Country
Divided Union
 War
 Slavery
Emancipation Proclamation

Moment of Sheer Brilliance
 Limited
to Slaves in the South
 Focused on those fighting against Union
 Became the beginning to the end of slavery
Integrative Thinking

The Opposable Mind
 Roger

Martin
The ability to create solutions beyond obvious and
unsatisfying choices
 Containment
over war or acquiescence
 Distributing software on internet over fee or free

A willingness to embrace complexity and reject
suboptimum outcomes
Good Faith

The Essence of “Getting to Yes”
 Roger
Fisher and William Ury
 Separate
People from the Problem
 Focus on Interests Not Positions
 Invent Options for Mutual Gain
 Insist on Using Objective Criteria
Rule 2. Don’t Settle for a Bad Decision

Bad decisions can be slippery slopes that
 become
the rule in your life rather than the exception
 fundamentally reshape your values and future decisions

Be willing to
 Wrestle
with complexities to find optimum solutions
 Operate in good faith
Not just about Staying Out of
Trouble…

Problem Solving is a Key Professional Skill
 Connection
Point
 Keep Folks Happy
 Professional Knowledge & Judgment
Rule 3. Assume a Transparent World

HB 477
 Process
 Transparency

Living in a Digital World
 Volume
 Duration
 Re-transmission

Livelihood
The $64 Question

Is what I’m saying, doing, or writing something that
I’d be OK with if it was permanently captured and
shared with:
 My
family
 My current and potential clients
 My co-workers
 Competitors
 The media
 The government
The Three Rules for Avoiding Trouble



Rule 1. Know the Law
Rule 2. Don’t Settle for a Bad Decision
Rule 3. Assume a Transparent World
Thanks