Now let me give you a little background music.

I was exposed for the first time in the early '70s to the concept of “utmost good faith” while studying for my P&C license. Having, at that time, spent 15 years in the life insurance business as an agent, this was like a breath of fresh air. What a wonderful way to conduct business!

Since that time, our agency has followed that concept in ALL of our dealings with clients, companies and fellow employees. We do not deviate from this at all.

Now the proof of the pudding is in the eating, and here is where the rubber hits the road.

We are primarily engaged in securing medical malpractice insurance for our physician clients. Our client base consists of single docs up to the larger group practices.

Several years ago, we had a serious hard market with medical malpractice insurance in Florida. There were a few carriers that we did not do business with–direct writers, and one company that we did not have an appointment with.

Realizing that the availability of coverage and the rates from these carriers were better than anything we had for a number of our clients, we referred these clients to these companies. As a result, we lost 40 percent of our book of business over a two-year period.

Now, my questions for you, sir, are quite simple:

First, is this an example of “utmost good faith”?

Next, is this what an independent agent who works for the benefit of the client is supposed to do?

If your answers to the above questions are yes, then I submit that there is an army of “independent agents” out here who are deserving of some form of apology from you.

Thanks for listening.

SAM RESPONDS:

First of all, I think Mr. Waren's agency deserves a medal for honorable service–perhaps we could call it, “The Agency Award For Utmost Good Faith.”

Yes, indeed, Mr. Warren and his agency deserve applause for doing right by their clients–even if it cost them business in the short run. They could easily have presented their clients only with quotes from their own limited stable of carriers–albeit at a higher price and for worse coverage–and perhaps had kept the accounts, at least in the short term. In the long term, however, their credibility might have been shot for good, giving them no chance of ever winning back that business.

I raised this issue in the context of a challenge from J. Robert Hunter, director of insurance for the Consumer Federation of America. I believe the challenge is a valid one: Do agents, who brand themselves as independent, explain to clients what that means, exactly. Consumers are clueless enough about insurance, in general, and I wouldn't be surprised if a large percentage do not understand that their independent agent is not free to seek the best market from just any carrier.

Disclosing this fact of life is all I was getting at. My intent in raising this issue was not to insult independent agents or imply that they are all purposely misleading their customers. I brought up this topic in the spirit of full disclosure, given the contingency fee scandals that unfortunately tainted intermediaries of all sizes and stripes.

However, responding directly to Mr. Warren's challenge, I don't feel I owe anyone an apology just yet. In fact, I can't help but wonder how many agents in Mr. Warren's precarious position would have acted as he did in an impossible market.

That's the question I am posing to my readers today. I am putting all of you on the hot seat with me!

Would Mr. Warren's response be the common one if you found yourselves in his situation? If so, then perhaps I have underestimated the selflessness of my readers, and I will sincerely apologize. If not, my challenge on disclosure–at a minimum–stands.