Insurance Claims

Photo: Jimmy Forrest

Chung, MDRT's first female president, takes the reins as the insurance industry gets rocked by scandal and braces itself for reform. In October, New York state attorney general Elliot Spitzer accused the world's largest insurance broker, Boston-based Marsh & McLennan Cos., of steering business to insurers on the basis of contingent commissions or placement service-agreement fees, rather than which insurer offered the best price. Chung predicts tighter government controls over the insurance industry, similar to those that followed the Enron scandal, as a result.

HB: What attracted you to the industry?

A: Life insurance to me is one of the most misunderstood products … there's a lot of negativism that surrounds it. And yet, what I have found is that, if people understand what it really does, people can't have enough of it. Because what we're really talking about is protecting people's dreams, their futures, institutions that are important to them.

HB: How has the industry changed over the years?

A: When I began, most of us represented an insurance company. The insurance company basically housed us, paid for our expenses, so there was a loyalty to the company. [Now] I am an independent broker, so I have relationships with many different companies. I think that works to the consumer's advantage, because we have the freedom to actually look for what's best for the client. It's different in that we tend to be doing more counseling and there's more interactive dialogue.

HB: Insurance brokers' loyalties have come into question in light of the lawsuit against Marsh & McLennan and other large brokers. What impact do you think that will have on the industry as a whole?

A: Certainly from an industry perspective, no one condones behavior like that. So I think it has to play itself out, and we'll see what happens as it pertains to that particular case.

Yes, there have been abuses, but it's few compared to the number of people who are actually doing business legitimately and honestly. Sometimes with these government regulations, there's a tendency to overreact. Some of the [regulations] we're living with today, as a result of Enron, are time consuming. For those of use who have always operated with integrity, it's just more work. And I'm not sure that the consumer is any better protected. I don't think you can legislate character and morality, right?

HB: As an industry, what can you do to preserve trust?

A: That's where organizations like MDRT come into play. We're an international organization who prides itself on the fact that we represent the best of the best in the industry. Our members abide by a code of ethics, they've committed to do what is right for the client and put the client's interests in front of their own. So what we do is basically try to reinforce great behavior, set the standard and be role models for others.

HB: Any closing thoughts?

A: Hopefully what good can come out of [these lawsuits] that is that the consumer will consider the source. We just saw a clip recently [where financial guru Suze Orman] was blasting annuities. [But] when it comes to financial advice, it's very hard to generalize. The industry has changed so much that it's much more complex than that, it's about what are your goals, what are you trying to achieve, what have you done with your money? When people give blanket advice [over the media] and someone takes it to heart, you could do tremendous damage.

Another thing is, in my travels with MDRT, I've found that, around the globe, the industries are at different stages, and yet when you come down to the basic good that we do, it's pretty universal and that's really kind of cool.