Over the last several years, I have become familiar with the details of some civil lawsuits involving insurance producers. In a few of these cases, it was clear that the producer had made some bad decisions that resulted in harm to the insurance company or to the policyowner. I have frequently wondered how these producers�some of them with many years of otherwise unblemished histories�came to take the actions that brought them so much grief. In depositions, their attempts to justify those actions after the fact seem much like a little boy trying to blame the baseball for the broken window.

It is my experience that most insurance producers (like most lawyers) are good people who seek to do the right thing. So, why do good people sometimes make bad choices?

An article in the Harvard Business Review asked the same question more specifically: "How could top-level executives at the Manville Corporation have suppressed evidence for decades that proved that asbestos inhalation was killing their own employees? What could have driven the managers of Continental Illinois Bank to pursue a course of action that threatened to bankrupt the institution, ruined its reputation, and cost thousands of innocent employees and investors their jobs and savings? Why did managers at E. F. Hutton find themselves pleading guilty to 2,000 counts of mail and wire fraud, accepting a fine of $2 million, and putting up an $8 million fund for restitution to the 400 banks that the company had systematically bilked? How can we explain the misbehavior that took place in these organizations�or in any of the others, public and private, that litter our newspapers� front pages . . ."

I believe the answer is fairly simple. These people probably did not start out intending to do wrong, but, in the words of Warren Buffet, they let their moral compasses deviate from North. This premise requires us to begin with the assumption that most people take actions designed to achieve what they believe will be in their best interests. When problems arise as a result of actions a person takes, it is not because the problem was desired but because (a) the action was a mistaken attempt to achieve a correct goal, or (b) the person had an incorrect picture of what was best�he or she allowed his or her compass to shift away from North.

A mistake made while trying to do the right thing is only a mistake. At worst it might be an act of negligence, but it is not an ethical problem because an unethical act requires some intent to do wrong. However, an incorrect picture of what is best will usually tempt you to make bad choices and take bad actions. Perhaps an example will be useful.

Sue and Bob are preparing for an extremely comprehensive exam given by their employer. If they pass, they will be given more responsible positions and higher pay. Sue�s goal is to master the material so that she will be completely prepared for any question that might be asked about that topic on the exam. Bob�s goal is to be promoted and earn more money. Alan has a copy of the exam. He offers to sell the exam to Bob and Sue for $500 each. He explains that by studying the exam, they will know "all the important stuff" that they will need to pass the exam and to do the job. Bob buys the exam; Sue does not. Both pass and are promoted.

If the job for which they are now both "qualified" is making the telephone recordings about which movies are playing at the local theater, then you probably don�t care very much about Bob�s ethics. But what if the job is air traffic controller, commercial airline pilot or elevator mechanic? What if passing the test allowed Bob to become your tax return preparer or heart surgeon?

With these latter jobs, it is clear that passing the test without gaining the knowledge was not in Bob�s best interest (or ours). Clearly, Bob has made a bad decision based upon an incorrect picture of what was in his best interest. He thought it was in his best interest to simply pass the test; but if the job has any meaning at all, knowing how to perform all of the tasks required�not merely passing the test�is the minimum qualification. Readers of this column should see an obvious comparison in the life insurance business. Is there a difference between the producer who has merely passed the tests and the producer who knows the science and art of life insurance?

Consequently, the first principle we must follow in order to consistently make right choices is to examine our picture of what is best. For insurance producers who are members of the American Society, I believe that this means putting the interest of the client ahead of our own. Our Code of Ethics is quite clear: "In a conflict of interest situation, the interest of the client shall be paramount."

There are two other principles:

1. Have a greater regard for the truth than for the advantage you might gain by telling a lie. Honesty is not one of the better policies, it is the best policy. Aristotle taught that: "Contemplation is the best activity. It is also the most continuous since we can contemplate truth more continuously than we can perform an action." Times have changed in 2,000 years, but Aristotle was right�it is easier to contemplate being truthful than it is to always tell the truth. Nevertheless, one who has always told the truth will sleep better than one who has not.

2. Conquer ignorance. Not knowing the answer when you should, or when the client thinks you should, creates an almost overwhelming temptation to pretend that you do. There are only two resolutions to this problem: (a) Learn your business well and keep learning it. (b) When you don�t know, admit it.

One day a Goat came to a Rabbit�s peanut stand and purchased five cents worth of peanuts. She gave the Rabbit a dime and received a punched nickel in change. The next day she plugged the hole in the nickel and went back for another bag of peanuts. The Rabbit refused to take the plugged nickel. "But it�s the same nickel you gave me yesterday!" said the Goat. "Not quite," said the Rabbit. "Yesterday the hole was open for all to see. I am not responsible if you were dumb enough to take it. Today, you offer me a plugged nickel and try to pass it off as the real thing. You are obviously an unethical goat and should be arrested for fraud." The Goat was not arrested, but she never bought any more peanuts from the Rabbit and neither did any of her friends. Moral: When dishonesty meets ignorance, everyone loses.