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Conflicts of Interest: Would You Be Able to Recognize One and Avoid it?

Publication date: June 15, 2016 | Last update: April 26, 2020

A conflict of interest is a situation in which a damage insurance or claims adjustment professional might put his own interests ahead of those of his client; such interests could also influence how he performs his professional duties. In addition to potentially harming the public, conflicts of interest violate the professional’s ethical obligations. The professional could be brought before the Discipline committee, he could be held liable for his conduct and his reputation could suffer.


A conflict of interest might occur, in particular, when the professional’s judgement is clouded by considerations that conflict with his client’s interests.

For instance, when a damage insurance representative is tempted, for financial or other gain, to sell his clients a product or renew their contracts without taking into account their actual needs, he has put himself in a conflict of interest. As far as the claims adjuster is concerned, he must settle the insured’s claim fairly, based on objective information (such as a fair and equitable evaluation of the losses incurred), and respect the terms of the insurance contract without receiving any benefit other than the compensation due to him.


A conflict of interest does not have to be real to be considered as such. Professionals should also avoid situations where a conflict of interest could arise, or situations that might lead one to believe that a conflict exists. For instance, it may be natural for a claims adjuster to want to help out with a relative’s or a friend’s case. However, the relationship between the professional and the claimant could lead to an appearance of bias and create doubts regarding the professional’s loyalty or judgement. A claims adjuster must refuse any involvement in the file even if there is only the mere possibility that a conflict of interest could arise.

A damage insurance agent or broker who sits on the board of directors of a non-profit organization or the town council might be asked by his colleagues to arrange insurance for the organization, given his expertise in the field. However, he should avoid doing so in order to protect himself against any appearance of conflict of interest.

When a professional starts asking himself questions like “Am I in a conflict of interest?” or “Could the situation affect my objectivity?” it is a sure sign that the situation could be problematic.


An employer might also influence a representative’s actions. For instance, a company directive requiring its damage insurance agents or brokers to limit the time they spend on the phone could affect an employee’s annual performance review. Yet it is the duty of a damage insurance representative to advise and explain all issues to his clients.

Will he be able to fulfill this duty properly if he is forced to limit the length of his phone calls? He is thus caught between his ethical obligations and the guidelines his employer imposes on him.

It is normal for certified professionals to be loyal to their employer. However, such loyalty should not overshadow their ethical obligations, which take precedence over the employer’s directives. The ChAD’s Discipline committee has confirmed this point on numerous occasions.

In Chambre de l’assurance de dommages v. Soucy, 2011-08-01(CA) and Chambre de l’assurance de dommages v. Béchard, 2011-08-02(CA), the committee wrote: 

[69] It should be noted that a professional’s ethical obligations take precedence over the employer’s directives and that this defense is inadmissible; 

[70] Finally, the insureds’ testimony established that, on several occasions, they had unsuccessfully requested a copy of the evaluation; 

[71] In short, even given his employer’s directives, the respondent’s explanations did not stand up and his defense is therefore rejected; 

previous decision of the same committee mentioned the following: 

[87] However, as a professional, the respondent’s ethical obligations superseded the directives she may have received from her employer; 

[88] It should be noted that a damage insurance broker must always protect his professional independence and uphold the letter and the spirit of his code of ethics, which is a public document;

When a damage insurance representative or a claims adjuster finds himself in a situation where his professional independence is threatened, his first instinct must be to remove himself from the situation while making it clear that he refuses to violate his code of ethics. The protection of the public is at stake. Moreover, when a professional’s integrity and professionalism are called into question, it could create consumer mistrust and taint the reputation of damage insurance representatives and claims adjusters.

​​Ethical Obligations
Ethical obligations concer​ning conflicts of interest and professional independence are addressed, most notably, in the following sections: