While ethical problems and compliance issues can occur during the sales process, many ethical issues arise out of the agent's conduct following the sales interviews. Keep in mind, ethical lapses can occur from things the agent does (errors of commission) as well as what an agent fails to do (errors of omission). Two critical problem areas are:
failure to obtain proper coverage, and
failure to maintain proper coverage.
These problems frequently occur on the property & casualty side of the business; however, they can occur on the life and health insurance side as well.
Failing to obtain coverage is usually caused by one or more of the following: improper analysis of the client's needs, failure to request the proper form of coverage from the insurer, or delays in obtaining the necessary coverage.
Failing to maintain coverage usually occurs because of a failure to notify the insured of non-renewal or internal agency problems in renewing coverage.
Since many life policies are permanent, renewal situations are less frequent than in health coverage or P&C business. According to industry surveys, renewal-related complaints account for more than one-third of all errors and omissions claims for property & casualty agents.