Essay Conflict of an Insurance Broker

814 Words Nov 25th, 2013 4 Pages
In the case “Conflict of an Insurance Broker”, whether or not A&A presents the Reliable bid to the museum constitutes a potential conflict of interest. As the insurance broker, A&A should be professional to obtain the best insurance coverage for the museum’s needs; more precisely, the market indicates that the value of the needed policy is around $100,000; therefore, A&A should remove Reliable insurance company whose annual premiums quoted was $60,000 from the proposed list, and then present the other four comparable insurance companies with annual premium that ranged between $90,000 and $110,000 to the museum. From the museum’s standpoint, however, the tight operating budget forces the museum to be extremely frugal in …show more content…
Regardless of museum’s behalf, for example, if A&A present the only four solicited proposals to the museum due to the high financial stake in the outcome, this is morally wrong. Second, if A&A present the Reliable bid to the museum, the stake will be high. Because Reliable is a financially shaky insurance company that may probably raise the premium in the future years. If so, A&A will bring the blame of museum for not making suitable evaluation. Furthermore, Allowing the museum to accept a low-ball bid, not a reliable bid, might also jeopardize A&A’s relation with the reputable insurers who submitted honest proposals in good faith.
The conflict usually occurs in the course of being a professional, Roughly, for A&A, to be professional is to make a professional judgment without any biases. The role of broker is to provide the best and reliable advice for the clients but not decide for them. Therefore, there are two possible approaches for A&A to manage this conflict.
One is to disclose all the five bids, including Reliable so that the museum will be unaffected by the conflict. The greater transparency, the less opportunity there is for conflict of interest to occur. The museum can make its own decision among these alternatives. For advising not to accept Reliable bid, A&A will not be responsible for the wrong decision made by the museum if relations with Reliable are not successful.

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