Who has the ethical duty to act in the best interest of their clients?

The ethical duty to act in the best interest of clients primarily falls on the insurance agent. Insurance agents are in a fiduciary relationship with their clients, meaning they are obligated to act in the clients’ best interests, provide competent advice, and disclose relevant information regarding insurance options. This fiduciary responsibility requires agents to prioritize the needs and welfare of their clients over their own interests or the interests of the insurance company they represent.

In contrast, while an insurance company may have a general responsibility to treat policyholders fairly, it does not have the same fiduciary duty to the individual clients. The policyholder is primarily a consumer in this relationship, and their responsibility is to make informed decisions based on the information provided to them. Meanwhile, the regulatory authority's role is to oversee and enforce compliance with laws and regulations rather than to act in the best interest of individual clients. Thus, it is the insurance agent’s duty that specifically encompasses the ethical obligation to act in the best interest of their clients.