THE CASE OF THE ABSENT AUDIT : One of your small restaurant accounts has been ch
ID: 2751969 • Letter: T
Question
THE CASE OF THE ABSENT AUDIT : One of your small restaurant accounts has been chugging along for over 10 years with fairly leval sales.Then, about nine months ago, a large new housing development was built on the same road, a few blocks away. Yor account is suddenly one of the hottest spots in town, and her sales are going thrugh the roof. Every Friday you stop for lunch, she is beaming ear to ear at the crowded dining room. On one hand you are happy for her new-found success. On the other hand you are dreading renewal time, as when the carrier finds out about the higher sales figures and does an audit which will adjust the renewal coverage & premium her new rates will increase significantly. You have talked to her about it, but you feel she really hasn't got the message. Renewal time comes and goes and no audit appears. You e-mail the carrier and they tell you, because the previous audits have not shown enough increase in premium to justify the cost to do an audit, they decided to close the policy year without an audit. As you read this message on your computer, you find yourself with mixed emotions. Your client just caught a major break, but you know the carrier (and you) is leaving a lot of money on the table. WHAT DO YOU DO AND WHY?
Explanation / Answer
It is an ethical question and the action depends on the ethcal positions I take regarding the case.
In situational aspect , I must think about the effect of the carrier knowing about the lost premium and the fact that I did not alert them in spite of having a knowledge about the increased sales. It would definitely hamper my relationship with the carrier. Even if i donot give a heads up to carrier , the client will also think that I am willing for cover up and compromise which is not a desired situation. Therefore from situational consideration , I must alret carrier about the loss of premium.
2. Rule Based approach : If I take rule based approach that the carriers rule is not to audit certain types of accounts for renewal , then I can let it go as the carrier did it as per rule. But rules are guidelines and there may be exceptions and I have a duty to alert the carrier regarding the impending loss of premium.
3. People based appraoch :The client will be happy for the slip , the carrier defintely would have expected a heads up from me . Ultimately the increased sales levels will become known later on. So it is prudent to alert the carrier as a part of duty and be clear on ethical grounds that I have doen my duty without any compromise
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