What is Ethics?

Ethics involves learning what is right or wrong, and then doing

the right thing -- but "the right thing" is not nearly as
straightforward as conveyed in a great deal of business ethics
literature.
Many ethicists assert there's always a right thing to do based
on moral principle, and others believe the right thing to do
depend on the situation -- ultimately it's up to the individual.
Many philosophers consider ethics to be the "science of
conduct."
Seniors explain that ethics includes the fundamental ground
rules by which we live our lives. Philosophers have been
discussing ethics for at least 2500 years. Many ethicists
consider emerging ethical beliefs to be "state of the art" legal
matters, i.e., what becomes an ethical guideline today is often
translated to a law, regulation or rule tomorrow. Values which
guide how we ought to behave are considered moral values,
e.g., values such as respect, honesty, fairness, responsibility,
etc. Discussions around how these values are applied are
sometimes called moral or ethical principles.

Principles of business ethics

1. Avoid exploitation of consumers: Do not cheat/ exploit
consumers

through

business

malpractices

such

as

artificial price rise and adulteration.

2. Avoid Profiteering: Do not resort to hoarding, blackmarketing, profiteering and sale of harmful goods.
3. Encourage healthy competition: Do not destroy healthy
competition, which offers certain benefits to consumers.
Do not tarnish the image of competitors by unethical
means.
4. Ensure accuracy: Ensure accuracy in weighing, packaging
and quality while supplying goods to consumers.
5. Regular tax payment: pay taxes and other charges to
concerned

authorities

honestly

and

regularly.

Avoid

bribing officials and lobbying for favors.

6. Proper accounts-keeping: Maintain accurate business
records, accounts and make them available to all
authorized persons and authorities.

7. Fair treatment to employees: Pay fair wages, provide

facilities and incentives and also give humane treatment
to employees.
8. Keep stakeholders informed: Supply reliable information
to shareholders regarding financial position and other
policy decisions.
9. Accept social responsibility:

Honor

responsibilities

towards different social groups on voluntary basis and not

by force.

Business Ethics is now a Management Discipline:

Business ethics has come to be considered a management
discipline, especially since the birth of the social responsibility
movement in the 1960s. In that decade, social awareness
movements raised expectations of businesses to use their
massive financial and social influence to address social
problems such as poverty, crime, environmental protection,
equal rights, public health and improving education. An
increasing number of people asserted that because businesses
were making a profit from using our country's resources, these
businesses owed it to our country to work to improve society.
Many researchers, business schools and managers have
recognized this broader constituency, and in their planning and
operations have replaced the word "stockholder" with
"stakeholder," meaning to include employees, customers,
suppliers and the wider community.
The emergence of business ethics is similar to other
management disciplines. For example, organizations realized
3

that they needed to manage a more positive image to the

public and so the recent discipline of public relations was born.
Organizations realized they needed to better manage their
human resources and so the recent discipline of human
resources was born. As commerce became more complicated
and dynamic, organizations realized they needed more
guidance to ensure their dealings supported the common good
and did not harm others -- and so business ethics was born.
Note that 90% of business schools now provide some form of
training in business ethics. Today, ethics in the workplace can
be managed through use of codes of ethics, codes of conduct,
roles of ethicists and ethics committees, policies and
procedures, procedures to resolve ethical dilemmas, ethics
training, etc.

INSURANCE - The indication of reforms

IRDA - central to the insurance reform process - is an
autonomous, regulatory authority endeavoring to protect the
interests of policy holders; and regulate, promote & ensure
orderly growth of the insurance industry. The IRDA has been
empowered to carry out several functions, including:
a. Promoting

and

regulating

professional

organizations

connected with insurance & reinsurance.

b. Improving the efficiency while conducting the insurance
business.
c. Establishing a code of conduct for players in insurance.
d. Determining the specification of accounts, and the
manner in which funds are invested.
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e. Laying down prudential norms for investment for both life

and general insurance companies.

Ethics in insurance today (present scenario):

According to insurance stakeholders, the issue of compliance with
ethics and best practices should govern market strategies and
operations.
Stakeholders have warned that the sector's efforts at achieving a
more robust financial capacity would be rubbished if steps are not
taken to address unethical practices and the prevalence of fake
institutions in the industry.
Insurance operators need to devote more of their energies and
resources to ensuring the emergence of a new order in terms of
players' attitude to the issue of ethics.

Insurance, being a business that is based on trust, could only win

the admiration and patronage of the buying public when there is a
widely acknowledged effort by operators to operate by the rules laid
down by trade bodies and the regulatory authorities.
One would agree that the level of capital companies have had to
raise within the last few years is quite challenging. That is why there
must be a collective resolve by underwriters, brokers, loss adjusters,
and agents to ensure that the additional funds injected into the
sector are safeguarded and used optimally through strict adherence
to ethics of the profession. Operators are usually expected to
display more commitment to ethical standards in all the operations.
There should not be any room for unprofessional and unethical
practices in the dispensation.
Generally, the fear of losing business, rate cutting and offer of illegal
inducements has compromised insurance operators' compliance to
the industry's ethics.
Industry watchers say experience of non compliance with ethics in
the insurance industry is a reflection of the situation in the larger
society, adding that professionalism, honor, service and social
responsibility, should be the key attributes of the sector.

Insurance and Ethics

Insurance, by definition raises ethical questions. Insurance
might be viewed as mans attempt to control and influence an
environment that we all know is in Gods hands. Mans attempt
to insure anything is, at best, limited. Insurance is nothing

more than a pooling of money to provide limited reassurance

for a limited set of assets or circumstances.
Many people look to insurance to provide them with a
complete sense of security and assurance. When they buy
insurance some people think, Oh, now I dont have to worry,
everything will be taken care of. Unfortunately, over the
years,

the

insurance

industry

has

often

nurtured

this

paternalistic and incorrect notion.

Because they do not control the world, insurance is only a
partial or stopgap measure to deal with the uncertainties that
the world presents. Insurance does not provide the kind of
universal coverage and assurance that many people look for.
Many ethical concerns with insurance exist because of this gap
between consumer expectations and genuine insurable risk.
For example, people are often disappointed, angry or
disillusioned to find that the insurance they have been paying
for does not cover a particular situation. This can leave
consumers feeling that insurance is a poor economic value or a
rip-off. In this business manager frequently hear statements
like, Ive paid thousands of rupees of premiums, and this
small claim isnt covered or Because I forgot two payments,
my coverage was cancelled. Now my claim wont be paid after
paying premiums for many years, or I didnt understand
what I bought, I thought everything was covered. Not meeting
a customers expectations can feel frustrating and dissatisfying
to them. Because of this difference between what people
expect and what insurance provides, insurance is one of the
most highly regulated industries in our country. Although it is
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national in scope, it is one of the few industries of its kind that

is primarily regulated at the state level with 50 different sets of
laws and regulations governing insurance.
Historically, insurance has played an important role in the
development of world economies. Unfortunately, there are
times when the industry has not been a good corporate citizen.
In some cases, the insurance industry has a history of
discrimination,

usurious

prices,

and

dishonest

business

practices.
Is insurance a good business after all? Does it raise so many
ethical questions that we should just avoid or eliminate it?
Once looked at carefully, insurance is a wonderful and much
needed product. Insurance, at its core, is a pooling of
community risks. It is a formalized way for people to come
together and help each other. For example, when we pay life
insurance premiums, we are putting our money together, not
just to help ourselves but to help other families. When
someone else dies, his family benefits because a payment can
be made from this pool of premiums and the investment
income that arises from it. When we die, our claim is paid to
our family, from the same pool. People, in more informal ways,
have done this for centuries. When someone dies, those
remaining help the family. This may appear very basic, but
insurance is much more powerful than just survivor benefits.
Insurance allows us to take risks and therefore fully live our
lives. Insurance is required in most industries and professions.
This gives us some assurance of the quality of goods and
services that we use. Commercial insurance for industries and
professions has underwriting standards that require certain
8

practices, safeguards, licensing, and so on. In this way,

insurance provides a form of safety net for consumers both in
terms of the product or service delivered and remuneration if
there is malfeasance.
Very few of us would have surgery, ride in an airplane, get on
an elevator, eat in a Restaurant, and drive cars, if there was no
insurance in place. Even more compelling, in many cases,
without insurance we would not enter into these businesses.
Without insurance one mistake could bankrupt the business
and shatter customer confidence. Insurance not only provides
protection to the consumer, but also frees us to conduct
business.
Insurance, just like money, is not an evil unto itself. It is a
channel that can be used in very good and helpful ways. Once
we accept the proposition that insurance actually is a good
business, the ethical concerns do not end. In fact, in many
ways, they just begin. Every day in running an insurance
business, ethical considerations arise.
A few of the questions insurance corporatists confront daily
are:
1. What is a fair price to charge? Should we charge as much as
we can, as little as we can, or something in-between?
2. What is the proper level of customer service? Just enough to
get by, more than the customer has bargained for, or
something in-between?

3. What kinds of policies and procedures should govern the

running of the company? Should we follow the letter of the law,
the spirit of the law, or both?
4. Which laws are we talking about, mans laws, Gods laws, or
both? When can and should we make exceptions to our policies
and procedures?
5. How should we contract with other companies? Should we
get as much as possible, give as much as possible, or
something in-between?
6. What should our benefits and compensation be for the
people working within the company? Should we pay them as
little as possible, as much as possible, or something inbetween?
7. What should be done when someone is not doing the job?
Should we help them, get rid of them, or keep them no matter
what? How can we best address these ethical dilemmas?

There are no hard and fast answers to any of these questions.

Based upon the situation, any of the answers may be right. It is
possible to face the changing questions, and the changing
answers, every day depending upon the individualistic views
and ethical followings.

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CODE OF ETHICS
Selling Life Insurance is like selling intangible product. So, the
marketing staff needs to observe a set of norms in his / her
professional conduct, which make him / her worthy of trust and
faith.
The Code of Ethics for the life insurance, marketing staff :1. To perform his / her duties in high esteem.
2. To give utmost priority to the client's interest.
3. Not to disclose client's confidential and personal information
4. To ensure prompt and sincere service to the client and his or
her family.
5. To use appropriate methods in convincing clients to protect
their

insurable interest.

6. To make truthful and accurate presentations.

7. To improve his / her knowledge of life insurance through
constant study.
8. To set a plan and work accordingly.
9. To maintain fair relations with colleagues.
10. To strictly follow the concerned laws and regulations.

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11. To obtain proposals only on the lives of persons who fits in

the

physical, moral and financial standard defined by the

Company.
12. To be loyal to the Organization.

The IRDA has formulated a Code of Conduct for the marketing

staff which comprises two broad group heads viz. "Do's" and
"Don'ts". They are listed herewith:

Do's
1. Identification of marketing staff and the insurance agency certificate of License to be shown to the prospect on demand.
2. Match the needs of his / her client with various products
available with his insurer.
3. Work out the premium to be charged so that his / her
prospect is able to weigh the economic or financial implication
of the proposal on his / her resources.
4. Bring to the notice of his / her client the implication of
various questions in the proposal form and other documents
and advise the client to disclose all the material information.
5. Disclose to the insurer all relevant information.
6. Inform the prospect about acceptance or rejection of the
proposal by the insurer.
12

7. Obtain all documents from the prospect for the completion

of the case.
8. Assist the policy holder in matters of:
Claim settlement,
Effecting nomination/assignment,
Revival, change of address,
Exercise of various options.

Don'ts - No Marketer shall

1. Solicit or procure insurance business without holding a
proper authorization.
2. Induce the prospect to omit to disclose the material
information in the proposal form.
3. Induce the prospect to submit wrong information in the
proposal form or in the documents submitted to the insurer for
acceptance of the proposal.
4. Behave in discourteous manner.
5. Interfere with any proposal introduced by any other
insurance marketers.
6. Offer different terms and conditions other than offered by
the insurer.
7. Part with or share his incentive with Prospect or with any
other person.
8. Receive a share of the policy proceeds from the beneficiary.

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9. Compel any person to terminate an insurance contract with

any insurer

in order to effect a new proposal within three

years from date of such termination.

10. Apply for fresh license to act as an insurance marketer if
his / her earlier license / authorization have been terminated
with in five years from the date of termination.
11. Remain or become a director of any insurer carrying on
insurance business in India.

Ethics in insurance: Building relationships through

trust
The momentum of the private insurance sector leaves no
doubt in ones mind that it is amongst the foremost growth
sectors of our country. A market share of 26.18 per cent in five
years is testimony to this. But even while one braces himself to
avail of the numbers within his/her sight, they need to realize
that the "long-term" will belong to that company which rigidly
benchmarks ethics for itself and for the industry. In a business,
where the customer entrusts the company with his / her
financial savings, ethics has a direct relation to sales. The
greater the trust, the more the sales.

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There are many ways to build trust through ethics, the most
fundamental being the way the product is designed. It should
offer complete clarity and transparency and the literature
supporting the product should not over-promise the benefits or
understate the risks.
For e.g. At Birla Sun Life, the use of the sales illustration, the
inclusion of the policy proposal form, and the free look period
they offer have served to win their customers' trust. By giving
customers the option to track investments online and by
publishing the performance of the funds against benchmark
indices, specifically prepared for Birla Sun Life by CRISIL, they
prove that they are an open and reliable organization.
Ethics is an attitude that needs to touch every aspect of the
customer relationship. It entails having great reverence for the
customer's needs, being open to suggestions and insights that
might enhance his / her comfort levels, building in riders and
flexibility

options

that

address

these

needs,

providing

assistance and clarity in documentation and upgrades, and

settling claims on time. Ethics means being fully accountable,
not just to the company and to its customers, but to the
industry they serve. The inspiration for ethics thus comes from
the highest source from a need to impact the industry.
On

the

flip

side,

lack

of

ethics

can

have

serious

consequences. Litigation and costs of settlement, business

losses, a reduction in ratings, and increased scrutiny are not
half as damaging as the loss to image and reputation. It's a
fact that good ethics makes good business sense. Of course,
the mandate for good ethics always stems from the top. Which
15

explains, why at Birla Sun Life, they have introduced a system

of checks and balances that guards against concealment and
why they follow norms of compliance and adhere to IRDA
regulations so scrupulously that their books and processes are
open to audit at all times.
While top management can lay down a code of ethics and
request

adherence,

its

implementation

depends

on

the

individual. As Albert Einstein said, "Ethics is an exclusive

human concern without any superhuman authority to back it..
Ethics is that discipline, that momentum that challenges a
company to rise above themselves and raise the bar each time
they interact. It is the means by which they measure
themselves, the strength by which they progress, and the light
by which they shall be remembered. It is the way ahead - for
each individual and for his industry.

What is Gross Misconduct in Insurance Sector?

According to the personnel manual of a leading insurance
company, the expression gross misconduct refers to the
following acts and omissions on the part of an employee:

16

(1)

Engaging in any trade or business outside the scope of his

duties except with the written permission of the insurance
companies.

(2)

Unauthorized disclosure of information regarding the

affairs of the insurance company or any of its customers or
any other person connected with the business of the
insurance company which is confidential or the disclosure
of which is likely to be prejudicial to the interests of the
insurance company.

(3)

Drunkenness or riotous or disorderly or indecent behavior

on the premises.

(4)

Willful damage or attempt to cause damage to the

property

of

the

insurance

company

or

any

of

its

customers.
(5)

Willful insubordination or disobedience of any lawful and

reasonable order of the performance or of a superior.

(6)

Giving or taking a bribe or illegal gratification from a

customer or an employee of the insurance company.

(7)

Remaining

unauthorizedly

absent

without

continuously for a period exceeding 30 days.

17

intimation

HDFC STANDARD LIFE INSURANCE COMPANY

LIMITED
CODE OF CONDUCT AND ETHICS

Purpose
This Code is intended for all the Board Members and Senior
Management personnel and includes areas of ethics, integrity
and honesty, providing guidance to help them recognize and
deal with ethical issues; mechanisms to report unethical /
dishonest conduct; and help foster a culture of honesty,
integrity and accountability.
Applicability
Ethical conduct is critical to the Companys business. This Code
does

not

specifically

address

every

potential

form

of

unacceptable conduct, and it is expected that the Board

Member and Senior Management of the Company will exercise
good judgment in compliance with the principles of Corporate
Governance. The Board Members and Senior Management of
the Company have a duty to avoid any circumstance that
would violate the letter or spirit of this Code.
Fair Dealing
The Board Members and Senior Management should deal fairly
with customers, suppliers, competitors and employees. They
should

not

take

unfair

advantage

of

anyone

through

manipulation, concealment, abuse of confidential, proprietary

or trade secret information, misrepresentation of material
facts, or any other unfair dealing-practices.
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Honesty & Integrity

The Board Members and Senior Management of the Company
are expected to act with utmost probity and professional
integrity, honesty and ethical conduct, while working in the
Companys premises, at offsite locations where the Companys
business is being conducted, at Company sponsored business
and social events, or at any other place where they are
representing the Company. All the Board Members and Senior
Management

of

the

Company

will

act

in

good

faith,

responsibly, with due care, competence and diligence, without

allowing their independent judgment to be subordinated.
Further, they will act in the best interests of the Company and
fulfill their fiduciary obligations.
Conflict of Interest
The Board Members and Senior Management shall not engage
in any business, relationship or activity, which may be in
conflict of interest with the business of the Company. A conflict
situation can arise under the following circumstances:
(a) When the Board Member or Senior Management personnel
takes action or has interests that may make it difficult to
perform his / her work objectively and effectively,
(b) When the Board member has Directorship/Agency with
other Life Insurance
19

Company,
(c) The receipt of improper personal benefits by a member of
his / her family as a result of ones position in the Company,
(d) Any outside business activity that detracts an individuals
ability to devote appropriate time and attention to his / her
responsibilities with the Company,
(e) The receipt of non-nominal gifts or excessive entertainment
from any person /company with which the Company has
current or prospective business dealings,
(f) Any significant ownership interest in any supplier, customer,
development partner or competitor of the Company,
(g) Any consulting or employment relationship with any
supplier, customer, business associate or competitor of the
Company.
Discrimination and Harassment
The Company is committed to providing a workplace free of
discrimination and harassment based on race, color, religion,
age, gender, national origin, disability or any other biases. It
would be the Endeavour of every Board Member and Senior
Management of the Company to see that work place is free
from such environment. If any employee is discriminated, he
/she may lodge a complaint of discrimination or harassment to
the Whistleblower Committee of the Company.
Compliance with Laws, Rules and Regulations
Board Members must comply with and oversee compliance by
employees and officers, with laws, rules and regulations
applicable to the Company / its personnel, including insider
trading regulations. Board Members must deal fairly, and must

20

ensure fair dealing by employees and officers, with the

Company's customers, suppliers, competitors and employees.

Confidential Information
The Board Members and Senior Management shall maintain
the confidentiality of Confidential Information of the Company
or that of any customer, supplier or business associate of the
Company

to

which

Company

has

duty

to

maintain

confidentiality, except when disclosure is authorized or legally

mandated. The Confidential Information includes all nonpublic information (including private, proprietary and others)
that might be of use to competitors or harmful to the Company
or its associates. The use of Confidential Information for his /
her own advantage or profit is also prohibited.
Prevention of Insider Trading
Employees and Board Members should observe all applicable
laws and regulations including the Companys policies and
codes as applicable to them with respect to dealing in the
Companys securities.

21

Policies regarding employee conduct and discipline

at LIC

The preparation & upgradation of the Personnel Manual of LIC

is the responsibility of the personnel & Industrial Relations
Department.
Given here below some rules and regulation regarding
employee conduct and discipline. Each of these issues are
covered in detail in the manual but have been explained very
briefly here:
(1) Obligation to maintain secrecy: An employee should not
communicate directly or indirectly and official documents
or information to any employee or other person to whom
he is not authorized to communicate.
(2) Participation in Demonstration: An

officer

of LIC

is

expected not to participate in any kind of demonstration,

resort nor abet to any kind of a strike.
(3) Private trading: Employees of LIC are not allowed to
engage directly or indirectly in any kind of trade or
business. They are not allowed to be involved in the
promotion

or

management

of

any

other

company

registered under the Indian Companies Act.

(4) Part time work: No employee is allowed to take any kind
of part time work for a private or public body.
(5) Acceptance of Gift: An employee of LIC is not allowed to
accept nor permit his wife or any family member to accept
any gift of more than a trifling value.
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Conclusion
The ethical and spiritual path in insurance, and in life, is an
individual one.
At times, it can feel like a solitary path. Ethics is not reached
by consensus but by conviction. The ethical path may not be
popular but it does stand the test of time. Ethics is not a hard
and fast set of rules but is based upon guiding principles.
Ethics should guide our communities, yet they are deeply
personal. Above all, ethics and the spiritual compass that
underlies our individual ethical code, is not a destination, it is
not even a journey, it is the journey. What is good, right and
true usually stands the test of time and may not always be
immediately apparent. The ethical stake in the ground will
always be scrutinized and criticized by someone.

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