Texas All Lines Adjuster Practice Test

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What is the main purpose of a Code of Ethics?

To promote competition in business
To establish a set of professional conduct standards
To regulate the pricing of insurance
To govern personal relationships

The correct answer is: To establish a set of professional conduct standards

The main purpose of a Code of Ethics is to establish a set of professional conduct standards that guide individuals in their professional interactions and decisions. This framework is crucial in ensuring that all professionals adhere to the same ethical principles, which fosters trust and integrity within the industry. A well-defined Code of Ethics provides clarity on what is expected regarding behavior, responsibilities, and the treatment of clients and colleagues, thus promoting accountability and competence. While the other options highlight important aspects of business operations – such as competition and personal relationships – they do not encapsulate the primary function of a Code of Ethics. In particular, regulating pricing may pertain to different regulatory measures and market practices but is not directly related to the ethical standards set for professional conduct.