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FIDUCIARY DUTYREEXAMINING PROFESSIONAL STANDARDS OF CONDUCT
Presented by: Michael Bricker, MBA, LUTCF
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TitleFiduciary Duty
Reexamining Professional Standards of Conduct
Number 1022174
Producer / CSR Property | Casualty | Life | Accident & Health | Title
Adjuster Property | Casualty | Workers Compensation
Course Length 100 minutes
Course Approval January 7, 2015 – January 31, 2017
Delivery Method Webinar
CE Credit 2H Ethics
PACE Credit CLU® ChFC® RHU® REBC® CASL® CLF® CAP®
Bricker Professional Education respects
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The objective of Fiduciary Duty: Reexamining
Professional Standards of Conduct is to
provide the student with an understanding of
the changing nature of fiduciary duty. The
course begins with a discussion of the legal
history and interpretation of fiduciary duty.
Training Objective
Next, the dual nature of the insurance
professional’s fiduciary duty to both insurer
and client is examined. Particular emphasis is
placed on the relatively recent expansion of
the role of an insurance professional to that
of risk manager including tools and resources
to fulfill this role.
Training Objective
1. Fiduciary Duty
2. The Insurance Risk Manager
3. Summary and Conclusion
Course Overview
Fiduciary Duty
Lesson One
11
What types of legal duty exist?
Can legal duties exist even if we are
unaware of them?
How do we determine what our legal
duties are?
Lesson Objectives
12
The U.S. Legal System
Court of Law
Legal disputes in which one party seeking
monetary damages from another
Right to a jury trial
Embodied in case law or precedent
U.S. Legal System
13
Courts of Equity or Chancery
Legal disputes where remedy at law
(money damages) deemed inadequate
Enforcement or prevention of an action
Evolution of fiduciary duty
Decision based upon maxims of equity
U.S. Legal System
14
Equity will not allow a right to exist without a
remedy
Equity regards as done that which ought to be
done
He who comes into equity must do so with clean
hands
15
Where there is equal equity, the law must
prevail
He who seeks equity must do equity
Equity aids the vigilant
Equality is equity
16
Cancellation or performance of a contract
Dissolution of a partnership or corporation
Accounting of money
Partition or division of real estate
Injunctions
U.S. Legal System
17
In recent years, many laws have
abolished the distinction between law
and equity
Combined into a civil action
Distinction still determines the right to a
trial by jury
U.S. Legal System
18
Duty of care
Tortious
Care toward others in order to protect
them from unnecessary risk of harm
Standards typically defined in common
law or statute
Duty of Care
19
Fiduciary
Legal relationship between trustee
(fiduciary) and beneficiary (principal)
A stricter standard of behavior than the
comparable tortious duty of care
The highest duty of care at law or equity
Duty of Care
20
Elements of Fiduciary Duty
Derived from Latin fides, or faith
Extreme loyalty to the beneficiary
Must not put personal interests before the
duty
May not profit from a position as fiduciary
Duty of Care
21
Duty not to be in situations where personal
interest and fiduciary duty conflict
Duty not to be in a situation where one
fiduciary duty conflicts with another
Must conduct themselves “at a level higher
than that trodden by the crowd”
Duty of Care
22
Fiduciary duty to insurer as principal
Appointment agreement
Case law within jurisdiction
Equity
Inspection of the subject of insurance
Duty of Care
23
Individual
Property
Vehicle
Operation
Duty of Care
26
Can I still have a fiduciary duty to inspect
the subject of insurance even if my carrier
doesn’t require an inspection?
Who does the inspection potentially
benefit?
Group Discussion
The Insurance Risk Manager
Lesson Two
28
What is our fiduciary duty toward our
clients?
Where do we find these duties? Statutes?
Regulations? Company Policies?
Does fiduciary duty change over time?
Lesson Objectives
29
Fiduciary Duty
To the client as principal
Historically satisfied by fulfilling role as
sales and service representative
Full and fair disclosure of product
benefits, limitations and exclusions
Fiduciary Duty
30
Reasonable post-sale service
Policy changes
Claims reporting
Billing inquiries
Trends in case law are expanding
fiduciary duty to that of a risk manager
Fiduciary Duty
31
Risk Management
Risk Identification
Possibility of financial loss
Risk Analysis
Probability of financial loss
Risk Recommendation
Risk Management
Risk Management
Risk Analysis
Risk Recommendation
Risk Identification
33
Risk Identification
Uncovering the client’s exposure to
financial loss
Asking questions
Application
Inspection
Risk Identification
Risk Analysis
Risk Recommendation
Risk Identification
Premature Death
Superannuation
Disability Income
Medical Expense
Dreaded Disease
Chronic Care
Unemployment
Divorce
Bankruptcy
Identity Theft
34
Risk Identification
Fire
Windstorm
Rain
Malicious mischief
Water
Sinkhole collapse
Earthquake
Disappearance
Power outage
Theft
Electrical overload
Terrorism
35
Risk Identification
36
Individual activities
Automobile
Premises
Product
Operations
Contractual
Risk Identification
37
Policy definitions as a guide to
identifying insurable risks
Accident
Accidental direct physical loss
Bodily injury
Insured
Risk Identification
38
Relative
Insured premises
Motorized vehicle
Personal property
Residence employee
Vacant
Risk Identification
39
What presentation tools can we use to
help our clients understand the risks they
face?
When should we discuss policy limitations
and exclusions with our clients?
Discussion Questions
Presentation Tools
Personal
PropertyLiability
41
Emergency removal
Debris removal
Trees and shrubs
Check forgery
Counterfeit money
Food spoilage
Additional Coverage
Grave markers
Collapse
Glass breakage
Additional Coverage
Money
Securities
Electronic devices
Theft of jewelry
Theft of guns
Theft of furs
Watercraft
Trailers
Business property
Collector cards
Comic books
Recreational vehicles
43
Policy Limitations
Ordinance or law
Earthquakes
Landslides
Civil authority
Nuclear radiation
War
Neglect
Wear and tear
Water damage
Power disruption
Intentional acts
Freezing or thawing
44
Policy Exclusions
Scheduled items
Animals
Motorized vehicles
Aircraft
Tenant’s property
Business records
Magnetic recording
Storage media
Digital music
Digital photographs
Land
Rented property
45
Policy Exclusions
War
Aircraft
Motorized vehicles
Trailers
Intentional acts
Contractual
Watercraft
Racing
Professional service
Business
Insured’s property
Illegal acts
46
Policy Exclusions
47
Risk Analysis
Priority of coverage
Frequency (%)
Severity ($)
Amount of coverage
Total dollar losses
Risk Analysis
Risk Analysis
Risk Recommendation
Risk Identification
48
Personal loss exposure
Current and future income needs
Emergency funding
Debt service
Education funding
Last expenses
Risk Analysis
Personal
PropertyLiability
49
Property loss exposure
Repair or replacement cost
Debris removal
Loss of use expenses
Loss of income
Risk Analysis
Personal
PropertyLiability
50
Liability loss exposure
Real assets
Income
Personal property
Savings
Risk Analysis
Personal
PropertyLiability
51
Knowledge Resources
Provide information and data for
analyzing risk exposure and
determining coverage needs
Frequency (%)
Severity ($)
Knowledge Resources
53
Insurance Information Institute
Approximately 1% of auto policyholders
have bodily injury liability claims with an
average claim of $14,848
Oklahoma was the third ranked state for
tornados in 2012 with 63 and 6 fatalities
Knowledge Resources
55
National Highway Traffic Safety
Administration
Motor vehicle accidents are the leading
cause of death for young drivers
Texting while driving increases likelihood
of an auto crash by 23x
Knowledge Resources
57
Insurance Institute for Highway Safety
2009-2011 Volkswagen Passat’s collision
claims were 69% higher than average
claims for similar vehicles
ABS reduce overall crash risk by 6 for cars
and 8% for trucks
Knowledge Resources
59
National Safety Council
Disabling injuries occur once every second
with an average income loss period of 34
months
Lifetime odds of death resulting from an
earthquake are 1 in 97,807
Knowledge Resources
61
National Fire Protection Association
16,800 annual home fires are the result of
clothes dryers that are not cleaned
frequently enough
December is the peak time for home
candle fires
Knowledge Resources
62
Risk Recommendation
Risk mitigation or reduction
Risk avoidance
Risk transfer
Risk retention
Risk Recommendation
Risk Analysis
Risk Recommendation
Risk Identification
63
Documentation of the risk management
process
Decision-making
Periodic review
Historical record
Legal defense
Risk Recommendation
64
Are most consumers aware of the
coverage options available under an auto
policy?
How do consumers generally decide upon
their auto coverage limits?
How do you calculate liability limits?
Discussion Questions
Bodily injury
Physical injury
Sickness or disease
Death
Property damage
Damage or destruction
Risk Recommendation
66
Medical Payments
Reasonable medical or dental expenses
Within three years from the date of
accident
Insured and occupants
‘Occupying’ defined
Risk Recommendation
67
Uninsured Motorist Coverage
Insured
Bodily injury
Stacking limits
Hit and run motor vehicle
‘Uninsured motor vehicle’ defined
Risk Recommendation
68
Risk Recommendation
Source: Insurance Research Council
Summary and Conclusion
Lesson Three
US Legal System
Duty of Care
Fiduciary Duty
Risk Management
Risk Identification
Risk Analysis
Risk Recommendation
70
Summary and Conclusion
71
Insurance Information Institute
Insurance Institute of Highway Safety
Insurance Research Council
National Fire Protection Association
Sources
72
National Highway Traffic Safety
Administration
National Safety Council
Sources