What is the required action for insurance agents when they encounter a conflict of interest?

When insurance agents encounter a conflict of interest, it is imperative that they disclose any potential conflicts to their clients. This requirement is rooted in the ethical obligation to maintain transparency and trust in the client-agent relationship. By informing clients about potential conflicts, agents demonstrate a commitment to prioritizing their clients' interests over their own personal or financial gains. This practice not only fosters trust but also helps clients make informed decisions about the insurance products or services being offered.

Transparency in disclosing conflicts of interest protects both the agent and the client. It ensures that clients are fully aware of any factors that could influence the agent's recommendations, allowing them to assess the information provided without bias. By adhering to this ethical obligation, agents uphold the integrity of the industry and contribute to a fair marketplace.

The other options do not align with the necessary ethical standards. Ignoring a conflict fails to address potential negative consequences for the client and undermines the trust in the agent-client relationship. Simply notifying their employer without informing the client does not uphold the client's right to be aware of situations that may affect their decision-making. Consulting with a legal advisor could be a prudent step in some situations, but it does not satisfy the immediate obligation to disclose potential conflicts directly to the client.