New Hampshire Ethical Standards for Producers

Beyond legal requirements, New Hampshire expects insurance producers to maintain the highest ethical standards. Ethics form the foundation of consumer trust and industry integrity.

Core Ethical Principles

The Five Pillars of Insurance Ethics

The "Reasonable Person" Standard

New Hampshire Applies:

• Would a reasonable, prudent insurance professional act this way?
• What would a competent producer do in similar circumstances?
• Does the conduct meet industry standards and best practices?

Examples:

Exam Tip: The "reasonable person" standard asks what a competent, ethical producer would do in the same situation. New Hampshire courts and regulators use this standard to evaluate producer conduct, even when no specific rule is violated.

Fiduciary Duties

Dual Fiduciary Responsibilities

Producers Serve Two Masters:

Duty to Clients:

• Act in client's best interest
• Provide competent advice
• Disclose material information
• Recommend suitable coverage
• Handle funds properly
• Maintain confidentiality
• Advocate in claims process

Duty to Insurers:

• Accurate representation on applications
• Proper premium collection and remittance
• Compliance with underwriting guidelines
• Timely policy delivery
• Honest claims reporting
• Protection of company interests

Managing Competing Interests

When Interests Conflict:

1. Disclose the conflict to all parties
2. Put client interest first in most cases
3. Don't sacrifice honesty for either party
4. Seek guidance if unclear how to proceed
5. Document decisions and reasoning

Example Conflict:

• Client wants to omit information from application
• Omission would result in policy issuance
• Disclosure might result in denial
• Proper Response: Explain requirement to disclose truthfully, consequences of concealment, and inability to submit false application

Exam Tip: Producers have fiduciary duties to BOTH clients and insurers. When interests conflict, general rule is client interest first, but NEVER compromise honesty or make false statements. Disclose conflicts and document reasoning.

Professional Competence

Duty to Maintain Knowledge

Producers Must:

• Understand products they sell
• Stay current with law changes
• Complete continuing education
• Know policy provisions and exclusions
• Understand coverage gaps and solutions
• Recognize when to refer to specialists

Scope of Competence

Know Your Limits:

When to Refer:

• Complex business situations → commercial insurance specialist
• High-value property → appraisal professional
• Legal questions → attorney
• Tax implications → CPA or tax advisor
• Investment-linked insurance → securities-licensed professional
• Technical coverage questions → underwriter or company specialist

Continuing Education Requirements

New Hampshire Requires:

• 24 hours every 2 years (including 3 ethics hours)
• Courses must be state-approved
• Ethics requirement emphasizes importance
• Responsibility for tracking completion
• No exemptions (even for experienced producers)

Beyond Minimum Requirements:

• Attend industry conferences
• Read insurance publications
• Take additional courses
• Obtain professional designations (CPCU, CIC, etc.)
• Participate in peer study groups
• Stay informed of market changes

Exam Tip: New Hampshire's 24-hour CE requirement includes 3 mandatory ethics hours, emphasizing that ethical conduct is a continuing responsibility requiring regular training and reflection.

Conflict of Interest Management

Common Conflicts

Disclosure Requirements

When Conflict Exists:

1. Identify the conflict clearly
2. Disclose to affected parties in writing
3. Explain how it might affect your judgment
4. Obtain informed consent to proceed
5. Document disclosure and consent
6. Monitor ongoing for new conflicts

Managing Commission Differences

Ethical Approach:

• Recommend product best suited to client needs
• Don't let commission differences drive recommendations
• Disclose if client directly asks about compensation
• Focus on value to client, not payment to you
• Document recommendation reasoning

Unethical Approach:

• Push higher-commission product unsuitable for client
• Misrepresent lower-commission option to steer client
• Conceal material differences between products
• Prioritize your income over client needs

Exam Tip: Producers may ethically accept different commission rates from different companies, but commission differences must NEVER drive unsuitable recommendations. Focus on client needs first; document reasoning for recommendations.

Client Communication Standards

Clear and Honest Communication

Best Practices:

Prohibited Communication Practices

Never:

• Guarantee claims will be paid ("This covers everything!")
• Promise coverage you can't deliver
• Misrepresent policy terms or conditions
• Use high-pressure tactics
• Make false comparisons to competitors
• Create unrealistic expectations
• Ignore or dismiss client questions

Written vs. Verbal Communications

Get It In Writing:

• Coverage recommendations and reasoning
• Discussions of coverage options
• Client requests to decline coverage
• UM/UIM rejection forms
• Material coverage changes
• Claims guidance provided

Why Written Documentation Matters:

• Protects producer in disputes
• Ensures clear communication
• Creates permanent record
• Required for some disclosures
• Demonstrates professionalism

Exam Tip: "If it isn't written down, it didn't happen." Document important communications, especially coverage recommendations, declined coverages, and client instructions. This protects both producer and client.

Privacy and Confidentiality

Client Information Protection

Confidential Information Includes:

• Personal identifying information (SSN, DOB, address)
• Financial information (income, assets, credit)
• Health information (medical conditions, treatments)
• Business proprietary information
• Claims history
• Coverage details

Privacy Laws and Regulations

Federal Requirements:

• Gramm-Leach-Bliley Act (GLBA)
• Annual privacy notices required
• Opt-out rights for information sharing
• Safeguards for data security

New Hampshire Requirements:

• Comply with federal privacy laws
• Protect confidential client information
• Implement data security measures
• Notify clients of breaches
• Maintain privacy policies

Data Security Responsibilities

Producer Must:

• Use secure systems for storing client data
• Encrypt sensitive electronic communications
• Shred physical documents before disposal
• Limit access to need-to-know personnel
• Train staff on privacy requirements
• Have breach response plan
• Maintain cyber liability insurance

When Disclosure is Required

May/Must Disclose:

• To insurer for underwriting/claims
• With client written consent
• To regulatory authorities investigating complaints
• Pursuant to valid subpoena or court order
• To prevent fraud or illegal activity
• To professional liability insurer for defense

Cannot Disclose:

• For marketing to third parties (without opt-in)
• Casual conversations about "interesting" clients
• Social media posts with identifying details
• To competitors or unrelated businesses

Exam Tip: Client information is CONFIDENTIAL and protected by law. Producers may only disclose with client consent, to insurers for legitimate purposes, or when legally required. Casual disclosure or data breaches violate ethical and legal standards.

Special Ethical Situations

Replacement Transactions

Higher Ethical Scrutiny:

• Replacing existing coverage raises twisting concerns
• Must be in client's genuine best interest
• Comparison must be fair and complete
• Disclose all costs (new underwriting, surrender charges)
• Document reasons for replacement recommendation

Required Disclosures:

• New waiting periods or exclusions
• Loss of accumulated benefits
• Surrender charges or penalties
• Underwriting requirements
• Cost comparison (apples-to-apples)
• Reasons why new policy is better

Warning Signs of Unethical Replacement:

• Misrepresenting current coverage to create need
• Omitting important differences
• Pressuring quick decision
• Downplaying costs of switching
• Emphasizing producer's commission (new sale)

Advertising and Marketing

Ethical Standards:

• All statements must be truthful
• Cannot disparage competitors unfairly
• Use disclaimers where required
• Substantiate all claims
• Avoid misleading headlines
• Disclose producer/company identity

Prohibited Practices:

• False or misleading advertising
• Bait-and-switch tactics
• Implying government affiliation
• Using "free" misleadingly
• Guaranteeing approval or coverage
• Comparative advertising with false facts

Social Media Considerations

Professional Standards Apply:

• Social media posts are public communications
• Same truthfulness standards as traditional advertising
• Cannot disclose confidential client information
• Maintain professional image
• Respond professionally to complaints
• Avoid controversial non-insurance topics

Best Practices:

• Separate personal and professional accounts
• Use disclaimers ("opinions my own", "not specific advice")
• Avoid discussing specific client situations
• Fact-check before sharing industry information
• Maintain professional tone even in informal settings

Exam Tip: Ethical standards apply to ALL producer communications—including social media, casual conversations, and informal marketing. Producers cannot say things online they couldn't say in advertising or sales meetings.

Handling Ethical Dilemmas

Decision-Making Framework

When Facing Ethical Questions:

1. Identify the ethical issue clearly

   • What decision needs to be made?
   • Who is affected?
   • What are the competing interests?

2. Consider applicable rules and principles

   • What do laws/regulations require?
   • What do professional codes say?
   • What would the "reasonable person" do?

3. Evaluate options and consequences

   • What are possible courses of action?
   • What are consequences of each?
   • Who benefits and who is harmed?

4. Seek guidance if uncertain

   • Consult agency compliance officer
   • Contact insurance department
   • Speak with professional colleagues
   • Consult attorney if needed

5. Act with integrity

   • Choose ethical course
   • Document reasoning
   • Implement decision
   • Accept consequences

6. Reflect and learn

   • What worked well?
   • What would you do differently?
   • What did you learn?

Common Ethical Dilemmas

Exam Tip: When facing ethical dilemmas, use a systematic framework: identify the issue, consider rules and principles, evaluate options, seek guidance if needed, act with integrity, and document your reasoning.