Ethical behavior is based on
reasoned consideration of all issues surrounding a conflict
Morality is
universal and basic to human
... [Show More] relationships
Maintaining high ethical standards is best associated with
knowledge of law and regulations
The Sarbanes-Oxley federal law requires that publicly traded companies identify principal ethics officers, create anonymous hotlines for reporting unethical behavior, and
establish codes of ethics.
Enforceable components of the CPCU Code of Professional Conduct are the
Guidelines and Rules.
Lloyd is a commercial property underwriter at Insurance Company (IC). Two years ago, he completed his studies and obtained the CPCU designation. Due to recent changes in workers compensation legislation in one of the states in which IC operates, the insurer has arranged for a one-day seminar to explain the changes and the impact they will have on underwriting and claim settlement. Considering Lloyd's obligations under the Code of Professional Conduct (the Code), which one of the following statements is correct?
Choose one answer.
A. Lloyd is required to complete any training made available by his employer.
B. Because Lloyd has his CPCU, further training is considered unnecessary.
C. The Code requires Lloyd to remain current on all changes in insurance legislation.
D. Because the seminar is not directly related to Lloyd's job, he is not obliged to attend.
D. Because the seminar is not directly related to Lloyd's job, he is not obliged to attend.
Ming is the chief actuary at ABC Insurance and a CPCU. Ming has developed a new method for calculating incurred but not reported losses (IBNR). He has tested the method over a number of years and has found it to be much more accurate than the traditional method used by most actuaries. Because the new method gives Ming more confidence in the accuracy of his rate-making data, it allows ABC to charge lower rates than its competitors. This in turn gives ABC a marketing advantage. Which one of the following best describes Ming's obligations under Canon 5 of the Code of Professional Ethics regarding raising the professional standards of the insurance profession?
Choose one answer.
A. The new IBNR calculation method constitutes a trade secret and Ming is under no obligation to divulge it.
B. Because the new method could benefit consumers in terms of lower rates, Ming is required to share it with other insurers.
C. Canon 5 specifically prohibits CPCUs from divulging information about their employers' business practices.
D. Ming should write a professional article in an actuarial trade journal describing the new IBNR calculation method.
A. The new IBNR calculation method constitutes a trade secret and Ming is under no obligation to divulge it.
Elin is a surety producer and a CPCU. She regularly deals with legal and accounting information. She notices that certain financial information provided by a contractor shows a deteriorating financial position. To best comply with Rule 6.1 of the Code of Professional Conduct as it concerns confidential information needed by a professional, Elin should
Choose one answer.
A. Suggest that a competing contractor consider merging with the client.
B. Report the newest financial information to the surety.
C. Counsel the client as to methods to improve the financial position.
D. Do nothing as the information is proprietary.
B. Report the newest financial information to the surety.
Hugo is a CPCU and resident vice president and regional manager of an insurance company. The state legislature is considering a bill that would alter auto coverages and require insurers to reduce rates by 25 percent. Hugo is invited to be part of a roundtable discussion on the legislation by the state public broadcasting affiliate. To best comply with Canon 7 of the Code of Professional Conduct as it relates to helping to improve the public understanding of insurance, Hugo should
Choose one answer.
A. Seek permission from his employer to present the position of his company.
B. Obtain and present the position of the insurance trade association to which his employer belongs.
C. Present objective information on the pros and cons of the legislation without taking a position.
D. Present his opinion on the legislation clearly noting it is his opinion and may or may not be the position of his company.
C. Present objective information on the pros and cons of the legislation without taking a position.
Daiki, a CPCU, has been underwriting a difficult account and has been working with the proposed insured's risk manager. On two occasions, Daiki has received letters from the risk manager with this typed below the risk manager's signature, "Almost a CPCU." Daiki learns that the risk manager has only one more course to pass to become a CPCU. Daiki's most appropriate action would be to
Choose one answer.
A. Ignore the verbiage as the risk manager has only one CPCU part to pass.
B. Ask the risk manager to stop adding the verbiage.
C. Report the risk manager to the American Institute.
D. Notify the employer of the risk manager of the practice.
C. Report the risk manager to the American Institute.
An insurance customer has alleged that Jake, who is a producer and a CPCU, has violated the Code of Professional Conduct. As a CPCU who is subject to a formal disciplinary proceeding before a Hearing Panel of the Board of Ethical Inquiry, Jake is entitled
Choose one answer.
A. To a hearing before a jury of his or her professional peers.
B. To the same due process rights as a criminal defendant.
C. To a hearing before the local court of common pleas.
D. To be heard in person and be represented by counsel.
D. To be heard in person and be represented by counsel.
Which one of the following statements is correct?
Choose one answer.
A. Business ethics are critical when an organization is threatened or faces fundamental change.
B. Ethical insurance professionals always do what is required by their employer.
C. Contradictory laws or societal norms set up conflicts that cannot be resolved ethically.
D. Ethical decisions are best made based on feelings rather than on reason or logic.
A. Business ethics are critical when an organization is threatened or faces fundamental change.
Which one of the following statements is correct?
Choose one answer.
A. When an insurance practitioner aspires to develop the traits of a professional, clients are unlikely to recognize the effort.
B. Insurance practitioners who are perceived as professionals will gain an advantage over other practitioners.
C. Awards based exclusively on monetary accomplishments recognize an insurance practitioner's professionalism.
D. The perception of professionalism is important for insurance practitioners only in terms of the public view.
B. Insurance practitioners who are perceived as professionals will gain an advantage over other practitioners.
Which one of the following statements is correct?
Choose one answer.
A. A standard of "utmost good faith" exists for many practitioners who work on behalf of insurers.
B. High ethical standards are not required in all professions.
C. In insurance, high ethical standards are only required of insurers.
D. An insurance professional should avoid being overly candid with insureds and claimants.
A. A standard of "utmost good faith" exists for many practitioners who work on behalf of insurers.
Which one of the following statements is correct?
Choose one answer.
A. Continuous pursuit of knowledge, utmost good faith in all dealings, and adherence to standards and regulations all contribute to professionalism.
B. Aspiring to be a professional need not require much personal sacrifice or time away from family or recreational pursuits.
C. Support of family, friends, and colleagues is irrelevant to achieving the status of a professional in the insurance industry.
D. Unfortunately, practitioners committed to professionalism often have difficulty adapting to changes in the global marketplace.
A. Continuous pursuit of knowledge, utmost good faith in all dealings, and adherence to standards and regulations all contribute to professionalism.
Which one of the following statements is correct?
Choose one answer.
A. An ethical insurance professional need not maintain knowledge of current regulatory issues.
B. Laws have no ability to help keep competition fair.
C. Adherence to ethical standards does not build consumers' trust in the insurance industry.
D. A pursuit of continuing education in laws and regulations helps insurance professionals avoid allegations of impropriety.
D. A pursuit of continuing education in laws and regulations helps insurance professionals avoid allegations of impropriety.
Which one of the following statements is correct?
Choose one answer.
A. Social responsibility expectations are in conflict with an insurer's goals of long-term survival and sustained growth.
B. In the modern world, attention to social responsibility has become a relatively low priority for most commercial businesses.
C. The primary purpose of insurance continues to be to generate profits for owners and shareholders.
D. Many insurance products have evolved from the identification of a social need and the industry's societal responsibility to meet that need.
D. Many insurance products have evolved from the identification of a social need and the industry's societal responsibility to meet that need. [Show Less]