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Don’t Let Bad Bosses Create E&O Nightmares, Part 1

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Are you your own boss? “Of course,” you reply. But even independents have bosses—those who attempt to “lead” them to success. These include IMOs, carrier reps, and even professional mentors. And all of these bosses either wear white hats (play totally by the book), black hats (burn the book if it impedes sales), or gray hats (read only those pages that fit their purposes).

If you have a white-hat boss, consider yourself fortunate. You’ll  probably never be asked to compromise your ethics, creating potential errors-and-omissions exposures. But if your bosses wear black or gray hats, watch out; they will be more focused on the ends, not the means. And “black-hatters” especially will have no qualms asking others to lie for them or to break the law as long as it advances their interests.

How do you “manage” a black-hat boss? Consider the case of Tom, an advisor who just signed on with a large senior-market IMO. After providing him with some initial training, the IMO sends out hundreds of direct mailers for a hot new insurance product. Problem is, the response rate is weak. So the IMO rep suggests the advisor simply call each person instead.

“What about the federal Do-Not-Call law?” the advisor responds. “Wouldn’t it be illegal to approach these names without first scrubbing them?”  Her response: “Call anyway, since the probability of consumers complaining is very slight, and even if they did, the FTC lacks resources to pursue small violators.” Plus, she advises him to lie – to tell anyone who complains that the government has granted a DNC exemption for this particular product.

How would you handle this black-hat situation? Clearly, you must refuse to break the law. But the question is how. Do you point out that the IMO’s position is illegal? What if the rep insists there’s no problem doing it her way? Do you then offer an alternative such as having the IMO scrub the list or buy a legal one? What if she still refuses to budge? Should you just end the relationship and start looking for a new IMO “boss”?

Clearly, we can’t point to a single best answer because it will depend on the circumstances of each advisor. But here’s what we can recommend: Resolve this (and all) black-hat boss dilemmas using the National Ethics Association’s SMART decision-making model. Here’s what to do:
  1. Study your options carefully.
  2. Make a mental note of everyone affected by each option.
  3. Assess who benefits or suffers from each option.
  4. Reflect on whether you’d be able to live with yourself after making each choice.
  5. Total up all the factors and reach a decision.
But what if your boss dilemma is less clear cut? That means you’re dealing with a “gray-hat” boss, a challenging scenario we’ll discuss in Part 2 of this series.

For more information on reducing your errors-and-omissions insurance risks, visit our E&O Headquarters at EOforLess.com.

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