1 Yusuf was an insurance professional but changed to an unrelated...

1 Yusuf was an insurance professional but changed to an unrelated career ten years ago. Yusuf just moved to another state and is now a producer for a local agency. As an insurance professional, Yusuf's best approach now should be to

Select one:

A. Learn the skills necessary to use modern computer systems.

B. Quickly become knowledgeable about his insurer's eligibility requirements.

C. Become competent in the application of the laws of his new state.

D. Begin a continuing education program to become competent for the markets he serves.

2 Herman is a supervisor who has been instructed to choose one of his three employees for layoff.

Employee Edward is a fair worker. He is a single parent with several young children. He would not find new work easily.

Employee Betty is a marginal worker. She has health issues that interfere with her ability to perform well. Herman admires her fortitude.

Employee Marisa is a solid worker whom he would like to retain. She is highly paid and dismissing her would help Herman meet his annual budget. She could find a new job without difficulty. Herman's boss hinted that he should layoff Marisa because she "did not play ball with him."

Herman recognizes that there will be ethical components to his decision making. He decides to apply an ethical dilemma decision-making flow chart. The first thing Herman should do is to

Select one:

A. Identify the conflict or ethical problem.

B. Look for an applicable code or standard.

C. Consider whether there is a duty or loyalty to uphold.

D. Gather information.

3 Insurance Company (IC) hired a vendor to perform real estate appraisals. The appraiser is a jovial fellow who prefers to be called "Lucky." Lucky does a great job, far better than any other appraiser IC has retained. The only problem is that when Lucky is in the office, he tells off-color jokes loudly enough for everyone to hear. Employees have complained to IC's management. When IC's business manager has asked Lucky to behave more appropriately, he just laughs and reminds her of what a great job he does.

IC has a policy of hiring vendors based on technical merit, as well as a policy prohibiting any type of harassment in the workplace. IC's business manager is not personally offended by the nature of Lucky's joking. Lucky believes that if he loses this contract, other insurers would be happy to retain him. IC's business manager must decide how to resolve the employee complaints concerning Lucky. She is presented with a dilemma if she applies

Select one:

A. The policy of hiring vendors based on technical merit.

B. Decision making based on the Golden Rule.

C. Decision making based on rules.

D. The policy of zero tolerance for sexual harassment.

4 Gilda accidentally drove her car off the road and down an embankment. She was severely injured. Her car was damaged but was repairable. Gilda's auto policy with Insurance Company (IC) covered medical expenses and other than collision (OTC) losses, but not collision losses. A relative notified IC of the accident. Because of Gilda's injuries, IC's claim representative, Alan, has not been able to speak with her.

As Alan arrived at the accident scene to take photos, a tow truck from an auto repair shop was removing Gilda's car. The operator asked Alan whether there was coverage to repair the car. Alan said probably not, as there was only OTC and no collision coverage. The operator said, "We'll see what we can do. The lady supports a family and will need her car fixed to get to work." The operator removed a small bottle from his pocket and squirted a red liquid on the wrecked car's bumper. He turned to Alan, and said, "Get a picture of this deer blood, which makes this an animal contact under OTC coverage. And if you know what is good for you, you won't say anything about what you just saw." 

Alan feels that he is being asked to participate in insurance fraud, but he is fearful of disclosing what he saw. He decides to consult the Code of Professional Ethics—Ethical Guidelines for Insurance Professionals (Ethical Guidelines) for direction. Which one of the following statements is true under the Ethical Guidelines?

Select one:

A. Alan should try to explain the concepts of collision and OTC insurance to the tow truck operator, because an ethical canon requires that he improve the public understanding of insurance.

B. Alan should study more closely the difference between collision and OTC coverages, because an ethical canon requires that he continually improve his professional knowledge.

C. Alan should report the situation to the proper authorities as insurance fraud, because an ethical canon mandates that he obey all laws and regulations.

D. Alan should pay the OTC claim, because Gilda needs her car for work and an ethical canon requires that Alan place the public interest above his own.

5 Insurance Company's (IC's) field claim personnel were invited to play softball against the members of a large law firm that has many clients with claims against IC and IC's insureds. IC's supervisors saw it as a friendly way to foster good-fellowship among professionals who are often adversaries. Afterwards, both teams retired to the same tavern. The senior partner at the law firm pulled out his firm's credit card and announced that everyone's snacks and drinks would be paid for by the firm. All of the following statements are true, EXCEPT:

Select one:

A. The claim personnel may have a conflict of interest if they accept food or beverages paid for by the law firm.

B. By paying the bill for the claim personnel, the law firm is assisting is establishing an honorable relationship between professions.

C. IC's employees should be aware that the law firm may be looking for something other than good-fellowship.

D. IC's employees who accept snacks and drinks paid for by the law firm have a duty to tell IC's management that they did so.

6 Claim representative Marta has a good relationship with Fatima, a defense attorney used by her employer. Marta and Fatima have met for coffee on their own time, and have common interests outside of their professional lives.

The insurance company for which Marta works has a policy prohibiting the receipt of holiday gifts from vendors. Fatima wants to send a fruit basket from her firm to Marta anyway. She sent an e-mail to Marta asking for her home address so that she can send the gift as a token of friendship and avoid any scrutiny from Marta's employer. Marta would like a free fruit basket, but is uncomfortable with the suggested arrangements. Which one of the following is a useful step she can take?

Select one:

A. Marta should provide her address to Fatima with the understanding that the gift is a token of friendship only and not indicative of a business relationship.

B. Marta should accept the gift so as not to hurt Fatima's feeling, but should then donate it to a local nonprofit food bank.

C. Marta should identify each ethical canon that might apply to the situation, and then consider the situation within the context of each applicable canon.

D. Marta should request that the gift be accompanied by a written statement that it is for Marta personally and not for Marta as an insurance company employee.

7 Claim representative Kasha is investigating a homeowners claim involving a tree that fell onto a house during a storm. She explained to the insured that the policy covers removal of the tree but not replacement of the tree. The insured asked whether there are ever circumstances where the policy would cover tree replacement.

Kasha knows that the policy would cover tree replacement if the loss had been caused by lightning. Kasha sees some discoloration of the bark of the insured's tree that suggests that lightning had hit the tree in the past, but she is fairly certain that lightning was not involved with this loss. Kasha fears, however, that if she mentions this additional coverage to the insured, the insured will argue that lightning caused the loss. Kasha believes that if the insured becomes contentious, home office will give in and make an unjustified additional payment. If Kasha decides to use an ethical dilemma decision-making flow chart to decide whether she should tell the insured about the additional coverage for lightning, the most useful step for her would be to

Select one:

A. Gather information—determine the duties owed.

B. Gather information—determine how the problem arose.

C. Gather information—monitor for future application.

D. Gather information—go to the source of the problem.

8 Insurance Company (IC) is concerned about its reputation of being an employer without diversity among its higher-ranked employees. IC has been asked by the local business association to provide a dozen of its employees to march in an Independence Day parade, which would be good publicity for IC. IC's vice-president of sales believes that the top twelve sales people should march, arguing that they have earned the privilege based on merit. The human resources director points out that there are no minorities among that group, and advocates that at least half of the marchers be members of minority racial groups. The sales vice-president and the human resources director are equally adamant in their stands. The company president must break the logjam. In using an ethical dilemma decision-making flow chart, the president should of the following, EXCEPT:

Select one:

A. Analyze the positive and negative impact on stakeholders

B. Evaluate the dilemma from various perspectives

C. Invite the public to take an Internet poll on the issue

D. Determine how IC's actions will be seen by others

9 Christine, an underwriter working for Insurance Company, placed a telephone call to Olivia, an agent, to complain that many of the applications submitted by Olivia and accepted by Christine lately represent poor quality risks. Christine told Olivia that she will be enforcing underwriting guidelines more strictly in the future. Olivia said she will do better, and then mentioned that no one is using her ski chalet next weekend and Christine and her family are free to use it. Christine would love to accept, but wonders whether that would induce an ethical conflict.

If Christine uses an ethical dilemma decision-making flowchart, she will

Select one:

A. Determine whether application of a professional standard/code will resolve any conflict.

B. Realize that there are no ethical issues that need to be resolved.

C. Recognize that no values or principles will be compromised by accepting Olivia's friendly gesture.

D. Determine that the circumstance is really a business conflict rather than an ethical one.

10 An underwriter has realized that most of the potential insureds in the poor section of town will not qualify for homeowners insurance because of below-standards roofing. This disturbs her and she is using an ethical dilemma decision making flow chart to decide whether there is an ethical obligation to underwrite their properties anyway. If she is concerned with the perspective of the potential insureds, then she is at which one of the following steps of the flow chart?

Select one:

A. Considering whether an application of a professional standard will resolve the issue

B. Determining which values and principles are at stake

C. Reviewing the dilemma from the three decision (rules-, situation-, and people-based) perspectives

D. Analyzing whether the issue is hers to resolve