CONFLICT OF INTEREST

• INTRODUCTION
• INSURANCE COUNCIL OF MANITOBA
• CANADIAN COUNCIL OF INSURANCE REGULATORS - Link to Paper

• REGULATORY BODIES / LICENSING

INTRODUCTION
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1. Conflicts permeate all levels of life; personal, business, political and religious.  They are unavoidable.
2. Conflicts are often perceived rather than real.  Everyone is involved with conflicts to some extent.  The solution is often in how the conflicts are handled.  Sometimes, simple disclosure is all that is necessary, other times withdrawing from a potential assignment is the only reasonable course of action.
3. There are some conflicts that are fundamental and systemic and cannot be avoided without a change in methods of doing business and regulation.

A person has a conflict of interest when in a position of trust which requires her to exercise judgment on behalf of others (people, institutions, etc.) and also has interests or obligations of the sort that might interfere with the exercise of her judgment, and which the person is morally required to either avoid or openly acknowledge.  The lesser requirement of open acknowledgment is usually adopted when it seems too burdensome to require that the person in a position of trust to divest herself of the interest that conflicts with her position of responsibility.

LAWYERS

American Bar Association specifies as part of a general rule on conflict of interest that

"A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's
responsibilities to another client or to a third party, or by the lawyers own interests, unless:

1) the lawyer reasonably believes the representation will not be adversely affected, and

2) the client consents after consultation.

When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved." ABA, 1989

Similar but more extensive rules apply in Manitoba.

BROKERS & INSURERS

There is no similar rule requiring brokers or insurers to avoid providing insurance to two companies that directly compete in the
same market, although the firm might need to be especially careful to avoid disclosing the proprietary information of one company to the
other.  It would be unreasonable to imply conflict of interest just because a broker or insurance company has more than one client in the
same industry; in fact this would be a positive selling point rather than a conflict.  See below for points to examine.

DOCTORS

The doctor bribery problem has reached such a high level that even JAMA (The Journal of the American Medical Association), which normally issues pro-drug propaganda, has noticed there is a problem. It has suggested an anti-bribery proposal which would:

1. Prohibit doctors from accepting free drug samples.

2. Exclude doctors who have financial ties to drug companies from serving on the hospital
            panels that determine which medicines should be on the preferred prescribing lists.

3. Prohibit drug companies from providing direct financing for educational programming.

4. Prohibit medical faculty from belonging to pharmaceutical companies' speakers' bureaus
            or publishing drug company articles as their own.

5. Require faculty members that receive financial support from pharmaceutical companies to
            post them on public Internet sites.

INSURANCE COUNCIL OF MANITOBA
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Conflict of Interest Guidelines Ins Council of Manitoba

Section 371(7) of the Insurance Act of Manitoba, which related to "sole occupation", was repealed under Bill 39. This has been replaced by a Conflict of Interest Guideline. All levels of insurance agents may sell insurance full or part-time provided there is no conflict of interest and the additional occupation they are involved in is not on the list of restricted occupations.

The Council's Conflict of Interest Guidelines are best understood in this overall context. They represent legitimate, good faith efforts to regulate the privilege of carrying on business as an insurance agent in the Province of Manitoba. As with its other rules and procedures, the Council discharges its statutory function in a manner that is consistent with the paramount objective of providing for consumer protection and the priority of policy-owner interests. Part of this process entails developing safeguards to limit the range of circumstances where there arises the possibility that a consumer will be subjected to a form of undue influence. Unfortunately that policy objective involves the need to restrict the licensing of individuals who also work in certain occupations.

The resulting limitation on the privilege of carrying on business as an insurance agent is neither discriminatory nor arbitrary. To the contrary, it simply reflects the reality that people working in certain occupations enjoy a relationship based on a number of factors which could give rise to the possibility of an undue influence situation. Such factors include:

1. a position of trust and integrity where significant deference is afforded;
2. a position of authority;
3. an ability to assert power or authority, or to award or curry favour;
4. an independent access to information and data which would not otherwise be readily available.

Ultimately, as with all potential conflict of interest scenarios, the Council must be concerned not only with actual conflicts but also with potential, apparent or perceived conflicts.

The restricted occupations MAY include, but are not necessarily limited to, those who could be considered capable of using undue influence, most notably, an officer or employee of a deposit-taking institution or those involved in lending money (banks), doctors, nurses, other health care professionals, lawyers, accountants, law enforcement officials, members of the clergy and government employees. Agents also should not directly occupy office space with any person engaging in a restricted occupation.

CANADIAN COUNCIL OF INSURANCE REGULATORS
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INDUSTRY PRACTICES REVIEW COMMITTEE

and

CANADIAN INSURANCE SERVICES REGULATORY ORGANIZATIONS

See web site for paper on Managing Conflicts of Interest:

A Consultation Paper on Enhancing and Harmonizing

Best Practices

February 2006