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Business Ethics
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Objectives of the course

To understand business ethics and

issues in the context of insurance sector

To understand corporate social

responsibility in general and in insurance context

To understand corporate governance,

issues and importance

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Morals, values, Ethics

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Ethics
Normative Ethics Applied Ethics Meta Ethics

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Business Ethics
Ethics is a normative science dealing

with morality i.e. right and wrong in a societal and behavioral context
Business Ethics is the understanding

and practice of ethics in the context of business

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Business Ethics
Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed. (Crane and Matten)

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The relationship between morality, ethics and ethical theory

Ethics rationalises morality

Morality Ethics

to produce ethical theory

Ethical theory

that can be applied to any situation

Potential solutions to ethical problems

Source: Crane and Matten (2004), Figure 1.2, page 12

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Lets start with a few questions

On a scale of 5 (very wrong) to +5 (very right), how would you rate:

Pretending to be a customer to get

information about a competitor

Animal testing of cosmetics Placing hidden cameras in offices for

routine security purposes

The sale of arms to oppressive regimes
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Ethical relativism assumes that:

Different people and cultures hold

different views acceptable

Different views are morally What is right is context dependant

Traditionally, business ethicists have

contended that there is an objective basis to determine what is right

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Business and ethics are intrinsically linked

Many business decisions are based on

certain ethical beliefs or values e.g.

That customers should/should not be exploited

That firm resources should/should not be available for

personal use

That deception in negotiation is/is not acceptable That fair competition is a good/bad thing That men and women should/should not be treated

equally

That paying bribes is/is not acceptable

Even bad ethics are ethics!

Ethics and Law

Benefits of Business Ethics

Employee commitment Investor Loyalty Customer Satisfaction Profits
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Ethical Issues in general

Honesty and fairness Discrimination Frauds Conflict of Interest
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Two Fundamental Types of Ethical Theory

Deontological: Involve having a duty

to do, or not to do, something e.g. bribery is wrong regardless of its consequences; and likewise, the golden rule is always right.
Teleological: Judges the rightness or

wrongness of an action on the basis of its consequences e.g. by engaging in an act of bribery, or by 12/1/12

Two main types of ethical theory

Motivatio n or Principles

Action

Outcom es

Consequentialist ethics
TELEOLOGICAL VIEW

Non-consequentialist ethics
DEONTOLOGICAL VIEW

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Consequentialist theories
Evaluates the outcomes of ethical decisions
Utilitarianism

Practical and very common in business

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Non-consequentialist theories
Ethics of duty Ethics of rights Ethics of justice

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Kantian Ethics
A man finds himself forced by need

to borrow money. He well knows that he will not be able to repay it, but he also sees that nothing will be loaned him if he does not firmly promise to repay it at a certain time. He desires to make such a promise, but he has enough conscience to ask himself whether it is not improper and opposed to duty to relieve his distress in such a way. 12/1/12

Ethical Issues in the insurance sector

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Actions for insurers

Establishing a code of conduct for

employees
Establishing an ethics office and an

ombudsman
Promoting employee education and

training
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Actions for insurers

1. Code of conduct . A formal statement of a companys

values and its expectations for how its employees behave in the course of business
. Not every ethical dilemma can be

addressed
. Employee involvement
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Actions for insurers

2a. Ethics office
Department in which employees can

receive advice or counsel from qualified professionals

Report ethical misconduct Ethics hotline / website

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Actions for insurers

2b. Ombudsman
An independent, impartial and

confidential professional who provides assistance to a companys stakeholders

Ombudsman reports to the board of

directors / CEOs
Facilitates development of of policies

and procedures in the workplace that promote ethical behaviour 12/1/12

Actions for insurers

c. Education / Training
Courses on ethics, insurance and

general business through local colleges

FLMI, ALMI, CLU, Fellow of the

Chartered Insurance Institute, FSA

Ongoing training process online or

in-person

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Actions for insurers

d. Membership in Associations
Have a strong influence on the ethics

and professionalism
Opportunity to meet, exchange

information, increase knowledge and express views

LOMA, Association for Life Insurance

Counsel, Life Underwriters Association of Canada, Actuarial Society of India, Singapore 12/1/12 society of