ILASA and Ethics

The Institute of Loss Adjusters (ILASA) has a broad Code of Conduct comprising four main principles:

  • high standards of skill and etiquette;
  • a relationship with the principal of trust, confidence and good faith and the preservation of independence;
  • integrity, conscientiousness and fair dealing; and
  • no gain other than through professional ability.

These principals are the ethical or moral values underpinning a code of conduct rather than the actual code of conduct. Modern codes of conduct or good practice tend to spell out the actions of the professional and how those actions should take place, leaving very little room for misunderstanding exactly what is meant by ‘best practice’. ILASA, like other professional bodies in the short-term industry, intends to amend its code of conduct to provide certainty and to introduce a code of ethics underpinning the code of conduct.

If you read any text on ethics, you are bound to come across the ‘golden rule’ – do unto others as you would have them do unto you – and this clearly illuminates the self-evident fact that all actions have consequences. Some codes of conduct have as a starting point the statement that you should not do anything that you would not like to be seen doing in the media the following day. In the business ethics arena, this may be a good prompt for the businessman who is deciding whether or not to do something. The use of the term ‘business ethics’ brings to mind the Judge in the Oudtshoorn Municipality case who discarded a history of insurance terminology when he determined that there is no such concept as ‘ultimate good faith’ – there is only ‘good faith’. ‘Business ethics’ is really only ‘ethics’ and because every single person working within an industry brings his or her own sense of ethics into the workplace; parameters have had to be put in place to determine the boundaries outside of which conduct becomes unacceptable.

Loss adjusters like to think of themselves as independent but because they are instructed by an insurer, they often have to walk that very fine line of obtaining the facts of a claim and presenting them objectively to an insurer without slanting the facts to suit the insurer and unfairly prejudice an insured. This is becoming more and more important with the Consumer Protection legislation, and the way the loss adjuster interacts with the insured or with members of the public is going to be subjected to scrutiny in the future. Actions and their consequences will be examined and loss adjusters need to keep about them their sense of ethics as the moral standard by which they perform any task.

The loss adjuster investigating a loss, large or small, needs to ensure that there is no element of self-interest involved when presenting the facts to the insurer and arriving at the quantum of the claim. The insurer places a great deal of trust in the ethics of the loss adjuster, and this trust cannot be betrayed – the loss adjuster needs to be ever vigilant that s/he is doing the right thing.

Those loss adjusters who practise as both loss adjusters and the claims management arm of an insurer are in an especially precarious position. Their stationary may fall foul of ILASA’s requirement that a loss adjuster may not insert on his practice’s stationary any business or occupation other than that of loss adjusting; and they have a potential conflict of interest situation relating to the retention of their independence which may become unmanageable from an ethical viewpoint.

Those assessors who share premises with repairers or contractors, and who provide an insurer with quotations from those selfsame repairers or contractors, are operating on the wrong side of ethics and when their actions become evident, the repercussions may be so serious as to preclude that assessor from getting work in the industry as s/he cannot be trusted by the insurer. Members of ILASA do not fall into this category but insurers should be aware that there are non-members who are guilty of such practices and insurers should ask probing questions of their assessing service providers who are not members of ILASA.

ILASA is a self-regulated body governed by a constitution and as such it cannot investigate non-members when complaints are received. However, as very often ILASA is the first port of call when there is a complaint, a mechanism is going to have to be put in place for complaints on unethical behaviour of non-members to report such unethical conduct to the insurer or the insurer industry body.

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