For which reason must an insurance agent disclose conflicts of interest?

An insurance agent must disclose conflicts of interest primarily to maintain transparency and trust with clients. Transparency is foundational in any professional relationship, particularly in insurance, where clients rely on agents for guidance and honest information regarding their coverage options and financial security. By openly disclosing any potential conflicts, agents help ensure that clients can make informed decisions based on their best interests, fostering trust in their relationship.

Trust is essential in the insurance industry because clients are often making significant financial commitments and decisions based on the advice of their agents. When clients feel that agents are honest and forthcoming about any conflicts, they are more likely to trust those agents and continue working with them long-term.

While avoiding legal repercussions, complying with company policy, and potentially attracting more clients are relevant considerations, they do not capture the primary ethical obligation that agents have to their clients. The focus on transparency and trust is central to professional integrity and the foundations of effective client-agent relationships in the insurance field.