introduction of ethics

ethics is derived from the greek word "ethikos" wich itself comes from the greek
word "ethos" meaning "custom " or "character". it is used to describe the guiding beliefs
or ideal that charactrize a community, nation, or ideology and deal ith the set of moral
beliefs and action for an individual or an entity. ethics is a branch of social science dealin
with right and worng, fair and unfair , good and bad with respect to human action. it is
concerned with norms of conduct of people as members of society, and deals with moral
duties and obligations, so is aso deescribed as moral philosophy.

Ethics can be defined as "a set of moral principles tet guide and govern the
conduct of a individual or a group ". it is the discipline that deals with what is good and
bad and with moral duty and obligation. Etical behavior is that which is in line with the
accepted moral code and refers to a code of coundct that guides an individual while
dealing with others. at its simplest, ethics is a system of moral principles that affect how
people make decisions and lead their lives.

When Hippocrates or charaka formulated "oaths" for doctors they were trying to
morally bind them to always act in good fait and to keep thier patients' wefare as the
only guiding principle. ethics, therefore , is a moral binding which has its role in the
overall behavier of individuals in the society. societies, however, ar dynamic institutions
and the perceptions change with the times.

Definition of ethics:-

According to Peter f. drucker, "There is only one ethics, one set of rules of morality,
one code that of individual behavior in which the same rule apply to everyone alike."

According to Philip wheel wright says," ethics is the branch of philosophy which is the
systmatic study of selection choice, of the standerd of right and worng and by which it
may ultimately be directed."

Types of ethics:-

1. Transactional Ethics.
 2. Participarory Ethics.

3. Recognition Ethics.

Transactional ethics:

Man is a social animal. He has to act and react with other through diffrent transactions.
The practices of ethics in all these transactions is called as transactional ethics.

Here all prties involved in the action pattern have interests that happens to concide in
time but that do not affect each other.

In order to let each party"s transaction run smoothly, all parties have to accept the
principle of quality.

In order to let things run smoothly following principles are required:

·1 Honesty

·2 Reciprocity

Participatory ethics:

It provides idea about how to meadite between business gals and morl demand and how
to serve the socity in more ethical way and gain corporate excellence.

It is guided by common good, all the participations follow some ethical practices.

Recognition ethics:

As human beings, people are endowed with the ability to understand the problems of
others. This quality leads to the recongnition of individuals, institutions and societies.
conflicting situations can be solved by the correct recognition of the situation.

E.g.: the strong is helping the weak; The learned is helping the lesser learneed; The
experienced is helping the ne entrant.
Features of ethics:-

The features of ethics can be explained by these points:

4. The concept of ethics is applied to human beings only as they have freedom of
choice and means of free will. They can only decide the degree of ends they wish
to pursue and the means to achive the ends.

5. The study of ethics is nothing but a field of scil science in which a set of
systematic knowledge about moral behavior and human conduct is learned.

6. Ethics deals with human conduct which is voluntary not forced by circumstances
or humans. So we can say that at the ground level ethics deals with moral
judgment regarding set directed human conduct.

7. Ethics is a branch of philosophy and is considerad as normative science because it

is concerned with norms of human beings.

8. Ethics in includs the following

9. Well based standards: Ethics refers to well based standards of right and wrong
that prescribe what human ought to do.

10. Study and development of ones ethical standerds: Ethics refers to the study and
development of ones ethical standeerds.

Nature of ethics:-

Personal Ethics

personal ethics are the moral foundation on which people build the live. they help in
decision making, guiding you towards actions that meet your internal moral standards.
they creat a framework for determining "right' from 'worng' and are turly the value
system used for daily problemsolving. they are not absolute, rigid rules, and are
developed thoughout ones life based on a veriety of factors. personal ethics refer to ones
personal or self - created values and codes od counduct.
professional ethics

professional ethics and those working in acknowledge professions exercise specialized

knowledge and skill. how the use of this knowledge should be governed when providing
a service to the public can be considerd a moral issue and is termed professional ethics.
professional ethics also inludes those valuse and principles introduced to individuals in an
organization .Every employes ia expected to follow theese peinciples so as to maintain
discipline and decorum in a profesional environment. examples of profeessional ethics
include confidentality, transparency and profciecy and time management.

objective of ethics:

1. the very basic objective is to define he greatest goodness of man and establish a
stander for the same.

2.to set/ establish moral standard/ norms of behavior.

3.an overall study of human behavior: what is moral or immoral should be assessed.

4.to apply judgment upon human behavior based on these standerd and norms.

5.to suggest moral behavior, prescribes recommendations about do"s and don"ts

6.one"s opinion or attitude about human conduct is expressed in general.

7.Describe, define and explain the importance of ethics.

8.Define moral.

9.Explain how ethics is the law, good business and how insurance involves utmost good

faith.

10. Define the concept of Utmost Good Faith.

Importance of ethics:-

11. Ethics is a requirement for human life.

 12. To the degree wich a rational ethical standard is taken, we are able to correctly
organize our goal and action to accomplish our most important values.

13. It is our means of deciding a course of action. Without it, our action would be
random and aimless.

14. Anyflaw in our ethical will reduce our ability to bbe successful in our endeavors.

15. Ethics are important because they give us a baseline for understandingof the
concepts of right an worng.

16. Ethics help us to have a ready understanding of how to react to a certain situation
long before that situation happens.

17. There are situational ethics whereby we react as the situation dictates but our
reaction is due to our built-in value system that tells us what to do, not the
situation itself.

18. Ethicis are important because they act as our mediator when dealing or coming
into contact with other people if we have the wrong sense of ethics we will reac to
people in a negative manner.

19. Ethics are iaining mportant because we pass them on to others. we have te ability
to show other the correct way to act and behave by remiaining ethical in the way
we live, regardless of whether it involves our personal or business life.

Introduction of insurance:-

Insurance is a means of protection from financial loss. It is a form of risk management,

primarily used to hedge against the risk of a contingent or uncertain loss.

An entity which provides insurance is known as an insurer, insurance company, insurance

carrier or underwriter. A person or entity who buys insurance is known as an insured or as
a policyholder. The insurance transaction involves the insured assuming a guaranteed and
known relatively small loss in the form of payment to the insurer in exchange for the
insurer's promise to compensate the insured in the event of a covered loss. The loss may
or may not be financial, but it must be reducible to financial terms, and usually involves
something in which the insured has an insurable interest established by ownership,
possession, or pre-existing relationship.

The insured receives a contract, called the insurance policy, which details the conditions
and circumstances under which the insurer will compensate the insured. The amount of
money charged by the insurer to the policyholder for the coverage set forth in the
insurance policy is called the premium. If the insured experiences a loss which is
potentially covered by the insurance policy, the insured submits a claim to the insurer for
processing by a claims adjuster. The insurer may hedge its own risk by taking out
reinsurance, whereby another insurance company agrees to carry some of the risk,
especially if the primary insurer deems the risk too large for it to carry.

Insurance became far more sophisticated in Enlightenment era Europe, and specialized
varieties developed.

Lloyd's Coffee House was the first organized market for marine insurance.

Property insurance as we know it today can be traced to the Great Fire of London, which
in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted
the development of insurance "from a matter of convenience into one of urgency, a
change of opinion reflected in Sir Christopher Wren's inclusion of a site for 'the Insurance
Office' in his new plan for London in 1667." A number of attempted fire insurance
schemes came to nothing, but in 1681, economist Nicholas Barbon and eleven associates
established the first fire insurance company, the "Insurance Office for Houses", at the
back of the Royal Exchange to insure brick and frame homes. Initially, 5,000 homes were
insured by his Insurance Office.[5]

At the same time, the first insurance schemes for the underwriting of business ventures
became available. By the end of the seventeenth century, London's growing importance
as a center for trade was increasing demand for marine insurance. In the late 1680s,
Edward Lloyd opened a coffee house, which became the meeting place for parties in the
shipping industry wishing to insure cargoes and ships, and those willing to underwrite
such ventures. These informal beginnings led to the establishment of the insurance
market Lloyd's of London and several related shipping and insurance businesses.[6]

Leaflet promoting the National Insurance Act 1911.

The first life insurance policies were taken out in the early 18th century. The first
company to offer life insurance was the Amicable Society for a Perpetual Assurance
Office, founded in London in 1706 by William Talbot and Sir Thomas Allen.[7][8]
Edward Rowe Mores established the Society for Equitable Assurances on Lives and
Survivorship in 1762.

It was the world's first mutual insurer and it pioneered age based premiums based on
mortality rate laying "the framework for scientific insurance practice and development"
and "the basis of modern life assurance upon which all life assurance schemes were
subsequently based."

In the late 19th century "accident insurance" began to become available.[10] The first
company to offer accident insurance was the Railway Passengers Assurance Company,
formed in 1848 in England to insure against the rising number of fatalities on the nascent
railway system.

By the late 19th century governments began to initiate national insurance programs
against sickness and old age. Germany built on a tradition of welfare programs in Prussia
and Saxony that began as early as in the 1840s. In the 1880s Chancellor Otto von
Bismarck introduced old age pensions, accident insurance and medical care that formed
the basis for Germany's welfare state. In Britain more extensive legislation was
introduced by the Liberal government in the 1911 National Insurance Act. This gave the
British working classes the first contributory system of insurance against illness and
unemployment.[13] This system was greatly expanded after the Second World War under
the influence of the Beveridge Report, to form the first modern welfare state.

life insurance:-

Life insurance (or life assurance, especially in the Commonwealth of Nations) is a

contract between an insurance policy holder and an insurer or assurer, where the insurer
promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a
premium, upon the death of an insured person (often the policy holder). Depending on the
contract, other events such as terminal illness or critical illness can also trigger payment.
The policy holder typically pays a premium, either regularly or as one lump sum. Other
expenses, such as funeral expenses, can also be included in the benefits.

Life policies are legal contracts and the terms of the contract describe the limitations of
the insured events. Specific exclusions are often written into the contract to limit the
liability of the insurer; common examples are claims relating to suicide, fraud, war, riot,
and civil commotion.

Modern life insurance bears some similarity to the asset management industry and life
insurers have diversified their products into retirement products such as annuities.

Health insurance

Health insurance is an insurance that covers the whole or a part of the risk of a person
incurring medical expenses, spreading the risk over numerous persons. By estimating the
overall risk of health care and health system expenses over the risk pool, an insurer can
develop a routine finance structure, such as a monthly premium or payroll tax, to provide
the money to pay for the health care benefits specified in the insurance agreement.[1] The
benefit is administered by a central organization such as a government agency, private
business, or not-for-profit entity.

Marine insurance:-

Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport
by which the property is transferred, acquired, or held between the points of origin and
the final destination. Cargo insurance is the sub-branch of marine insurance, though
Marine insurance also includes Onshore and Offshore exposed property, (container
terminals, ports, oil platforms, pipelines), Hull, Marine Casualty, and Marine Liability.
When goods are transported by mail or courier, shipping insurance is used instead

vehicle insurance:-

Vehicle insurance (also known as car insurance, motor insurance, or auto insurance) is
insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to
provide financial protection against physical damage or bodily injury resulting from
traffic collisions and against liability that could also arise from incidents in a vehicle.
Vehicle insurance may additionally offer financial protection against theft of the vehicle,
and against damage to the vehicle sustained from events other than traffic collisions, such
as keying, weather or natural disasters, and damage sustained by colliding with stationary
objects. The specific terms of vehicle insurance vary with legal regulations in each
region.

introduction of ethics in insurance

The study of the specific problems of insurance ethics remains relatively undeveloped,
either from sociological or business ethical perspectives. More recently, sociologists and
socio-legal scholars have given a sustained new wave of attention to insurance (see, e.g.,
Baker and Simon 2002; Baker 2010; Ericson et al. 2003; Doyle and Ericson 2010) while
the particular problems of insurance ethics have also received fresh scrutiny (see, e.g.,
Flanagan et al. 2007). These disciplinary approaches begin to meet in the collection of
articles in this special issue, which examine diverse contexts and disions of insurance
business ethics at both empirical and normative levels.

Insurance arrangements are very important to consider from an ethical perspective, as

they not only reconfigure risk but also reshape ethical responsibilities (Baker 2002;
Brinkmann 2005). As Turo-Kimmo Lehtonen and Jyrri Liukko explore in their article in
this special issue, private insurance creates an important kind of social solidarity among
those in the risk pool, although this solidarity is not necessarily evident to or understood
by the insured; such solidarity was perhaps clearer to participants in early forms of
insurance featuring small pools of people in relatively closely knit communities sharing
risks, compared to the much vaster and more institutionally complex forms that insurance
often takes today. Yet, insurance remains a crucial element of the contemporary social
fabric, though this may be taken for granted by many, and is perhaps most evident to
those who cannot afford adequate coverage. Indeed, micro-insurance in developing
countries, as discussed by Ralf Radermacher and Johannes Brinkmann in their article,
represents something of a return to the historical communitarian roots of insurance. On
the other hand, several of the articles in this volume might be seen as beginning to
suggest that the core values that were more easily evident in early, simpler forms of
insurance may have sometimes become corroded as a result of the contemporary ways in
which insurance is now organized. For example, Bill Lesch and Johannes Brinkmann
raise important questions in their article about the responsibility of insurers as co-
contributors to problems of insurance fraud.

a) Premium Collection issues

This is another challenge identified to be affecting this business in India. These

intermediaries are the distributing channels that stand between the insured and insurers. It
has been reported that insurance brokers and agents are fund of collecting premium from
insured and not remitting to insurance companies. These people use premium for other
things and quickly run to remit when claim occur and if claim does not occur they refuse
to remit the premium.

b) Problem of solvency

Cash flow problem is a confrontation to insurance business in India. It can be said that
these sectors live from hand to mouth. Based on this investors are chased away from this
market as no one is ready to embark on an investment that will not be viable.

c) Lack of Standards

It has been observed that there is lack of standard for this business in India, despite the
fact that there are recognized regulating bodies. Every player in this market act the way
they like and want without observing the laid down protocols. The standard kept in place
for the operation of this business has long been misplaced.

d) Poor Attitude of Government

The government does not encourage insurance practitioners. Over the years they have not
been able to release any relevant incentive to the operators into this business. The failure
of government to inject fund into this business has made it impossible for them to attract
investors as they cannot pay dividend not to talk of declaring bonus to shareholders.
e) Poor Management

A sizeable number of practitioners managing insurance business both the top

management and low level management are under – qualified. They are not competent
enough to manage this business. And this has really done a great harm to the business as
insurance business itself is a technical business and should not be handled by just
anybody but the right people, these are people that have passion and vision for the
business not just those that pop in to see what

is happening.

f) Lack of Integrity and Trust

Successful insurance companies evolve around trust which is absent. The major if not the
only reason of insured taking up an insurance policy is to have their claims settled should
in case of mishap. The image of insurance company can simply be determined by their
ability and attitudes to claims settlement.

Importance of ethics in insurance:-

20. Positive consequences:- business depends on the approval of the society,

acceptance of rules, mutual trusts and confidence. When ethical conduct is
displayed, it puts some kind of trust and confidence in relationship. So business
with ethics always leads to positive consequences.

21. Goodwill of the Business and Businessman:- Good ethical behavior will
increase the goodwill of both business as well as the businessman. Strong public
image is a symptom of success in the long run. On the other hand, once an
organization"s image is tarnished it would have direct consequences on sales,
profits, morale or day-to-day running of the business.

22. Protection-both sides:- If ethical implications are there in organization

businessman act more sincerely and the level of commitment would be higher.
Ethics protects people in dealing with each other. Good ethics is sound business
insurance.
23. Self-satisfaction:- In the dynamic world, businessman are seeking self
satisfaction, mental relief, free from anxiety, release tension. To attain the inner
satisfaction certain people consider only good ethics can promote good business.

24. Encourrage other :- when a few people start foolowin ethics side by side to
profit making, they encourage, motivate other and set examples for them.
Businessman who follows the ethical principles in the conduct of business,
motivats other also, to follow the same principles.

25. Success and Development:- Ehical conduct of business leads to

development and series of success. A sincere person who does hard work becomes
ethical and always succeed in his efforts but an unethical person cannot.

26. Stop business malpractices:- When business ethics is put in the practice, i
will stop the business practices. Not all businessmen involve wiht business
practices but there are some immoral businessman doing business malpractices.
Business malpractices is involve with unfair trade such as black marketing, selling
clone product, selling harmful product and many more thet can be harmful to
customers.

27. Improve customers confidence:- Business ethics are very important in

increasing customer confidance about the quality of product, quantity of products,
price of products, and other products that offered by company or organization.The
customers will have confidance and have a trust in doing busines that follows
ethics rules. They will feel safe when they buy the product of those companies
thet follows business ethics.

28. Survival of Business:- For business survival, business ethics is compulsory.

Dealers who do not follow business ethics usually will have a short term success
only. For example they have cheated the customer at once, but the customer can
remember and they will not buy the goods again from that businessman besides
tell to their friends about that cheating. So the image of that busunessman will be
negative and leading to failure in the business or in the market. From that, and
 leding to failure in the business or in the mrket. from that, it is imortant to follow
the business ethics in appropriate ways.

29. Creates good images:- if a businessman follow all regulatios of ethics, then
the user acceptance is good. people can accept the goods from business and will
not criticized it besides support the business that conducted by those businessman.
It wil creat good image to socity when implementing good business ehics.

Ethical Issue in insurance Business:-

Currently there is high level of market indiscipline going on in insurance business. In the
pursuit of the operators in this market to get their own share from the market, they engage
in all sorts of unethical practices such as; rate cutting, thrashing basic facts that policy
holders should know from them. They are more concerned in the premium they will get
from the insured and not in carrying risk which is supposed to be the primary objective.
One of the legal principles that bind insurance business is that every insured should
contribute equitably to the insurance pool in proportion to the risk they are bringing into
the pool. One of the standards is being misplaced since clients are charged different rates
for the same risk. Another implication of this is that it leaves little reserve in the hand of
underwriters after removing running cost of the policies and management expenses. And
this in turn makes it very difficult for decision makers by them are; nationality, religion,
sex, age, education, employment and personality. According to them situational variables
are referent groups, rewards and sanctions, codes of conduct, type of ethical conflict,
organizational effect industry and competitiveness. Kohlberg (1984) observed that socio
moral atmosphere of an organization is a significant factor in the ethical decision making
of individuals working within it. Insurance is said to be critical to a well functioning
economy according to Pritchett et al (1996). Hence the importance of and the roles
played by insurance business cannot be overlooked in India. One of the main reasons for
this is because of the nature of this environment. In India, there is; high death rate, high
theft rate, frequent occurrence of accidents of all kinds. The level of risk that one is being
exposed on a daily basis is high compare to other developing and developed countries in
the world (World Fact Book by CIA). By taking up insurance policies individuals and
business entities (small and large corporations) can have reliable cover for their risk and
be secured. Any insurance business that will survive must not throw away ethics in the
conduct of its business. Henry (2003) said when a business behaves ethically other
business associates are persuaded to behave ethically as well. If responsibilities to
customers, employees and suppliers of a company are met with care, it earns her an
award of honesty, loyalty, quality and productivity. He cited an example that employees
who are treated ethically by their employers are more likely to behave ethically
themselves in their dealings with their customers and business associates (Henry, 2003).
of these respondents which represent 50% are bachelors’ degree holder, 30% are masters
dergree holders.

Ethical issues are found common in insurance business:-

1. Failure in identifying the customer's needs and recommend products and services that
meet their needs.

2. Conflicts between personal benefits and proper performance of employees

responsibilities

3. Unethical remarks about competitors, their products, or their employees or agents

4. lack of expertise or skills to competently perform one's duties

5. Misrepresenting in terms and conditions while selling products to customers.

6. Failure to provide prompt, honest responses to customer inquiries and requests

7. Failure to provide products and services of the highest quality in the eyes of the
customer

8. Conflicts of interest involving business or financial relationships with customers,

suppliers or competitors

9. Failure to identify the customer's needs and recommend products and services that
meet those needs.

10. Misrepresenting or concealing limitations in one's abilities to provide services.

11. Failure to provide prompt, honest responses to customer inquiries and requests .

Conclusion

The purpose of this research paper has been to examine and critically analyze ethical
issue in Indian insurance companies, to find out how clients are handled in insurance
companies and if insurers recognize it as an ethical issue. The research paper confirmed
that insurance companies recognize the moral dilemma in claims settlement; they
understand that if claims are not settled in ethical manner it will result in bad
consequence for company image which will fall back on the insured or the beneficiary