Ethical, Social and Culturally Appropriate Behavior Report

This report provides an in-depth analysis of ethical, social, and culturally appropriate behavior within the insurance industry, using Tower Insurance in New Zealand as a case study. It examines the ethical principles governing business practices, including the importance of transparency, accountability, and customer service. The report explores ethical dilemmas, motivational theories (Maslow's and Hertzberg's), and sustainability factors within the insurance sector. It discusses the application of descriptive ethics, the role of managers in ethical decision-making, and the impact of ethical considerations on customer choices. Furthermore, the report delves into the concept of corporate social responsibility (CSR) and its implications for the insurance industry, highlighting the importance of ethical conduct and its influence on organizational success. The report also touches upon the role of government in risk management and the privatization of risk, offering a comprehensive overview of the ethical challenges and opportunities within the insurance landscape.

Assignment 2
Ethical, Social and Culturally Appropriate Behavior

Executive Summary
Tower Insurance in New Zealand offers three types of covers. The standard, which is a limited
cover, incorporates the one event, one excess, No claims and the Temporary accommodation.
The Plus claim, which is comprehensive, consists of the replacement value for contents,
spectacles, hearing aids and dentures as well as the jewelry cover. Finally, its premium cover
whose contents include temporary accommodation, curtains and bicycles. The diversities in the
claim covers make it suitable for most of the social needs that the consumer in the region may
have. The process of turning the social needs into insurance business needs raises ethical
questions. Risk management calls for integrity, exclusive management and a good customer
relationship. This report critically analyses the business values in the insurance business with
reference to the New Zealand Society. It follows the societal culture, especially for the non-life
insurance covers with comparisons of the life covers. It asks the question “what influences
individual choice of insurance and the diversity in risk management?” It then looks at the
measurement of actual value for damages and other cultural values. It also raises questions of the
privatization of risk management and the role of government in collective risk management.

Contents
Executive Summary.....................................................................................................................................2
REPORT.....................................................................................................................................................4
Introduction.................................................................................................................................................4
Principles of Business Ethics (Section 1)....................................................................................................4
Rule of publicity......................................................................................................................................4
Equivalent price and service first principle..............................................................................................5
Conscience in business and spirit of service............................................................................................5
Business strategy and Ethics....................................................................................................................5
Professional Behavior in Organizational Management (Business Section 2)...............................................6
Application of Descriptive Ethics for business entity..............................................................................6
Ethics and functions of managers............................................................................................................6
Ethics for buyers......................................................................................................................................7
Ethical Dilemma (Section 3).......................................................................................................................7
Motivational Theories..............................................................................................................................7
Maslow................................................................................................................................................7
ERG Theory........................................................................................................................................8
Hertzberg’s Two Factor.......................................................................................................................9
Sustainability Factors in the Insurance Industry (Section 4)......................................................................10
Sustainability and corporate performance..............................................................................................10
Governments role..................................................................................................................................10
Organizational objectives......................................................................................................................11
Conclusion.................................................................................................................................................11
Bibliography..............................................................................................................................................12

REPORT
Introduction
Questions about the ethical, social and culturally appropriate behavior in organizations arises
from the organizational goals (Hammer, 2000, p. 455). Tower insurance is a business in the
insurance industry of New Zealand. Controversies arise when the organization engages in
unethical practices. This report highlights ways in which the insurance organization becomes
unethical. The company covers a wide variety of covers including car, natural replacement value,
accident, liability cover among others. Utilitarian and deontological ethical issues arise in the
insurance business because of the personal duties and collective regulations. The report uses
theoretical approaches to describe these.
Customers have accused insurance companies of failure to provide compensation in various
issues. There have been doubts about good business practices by insurers and legal practitioners
appointed to follow up on the covers on behalf of the client. The Fredrick Hertzberg’s theory
explains this dissatisfaction (Gawel, 1997) Arguments against and for the insurance companies
determines the consumer’s decisions concerning some of the covers and the role of self-
motivation for consumers and employees as individual persons. Although self-motivation pushes
clients to adopt personal policies, others like the car insurance are mandatory requirements from
national laws. Professional conduct determines the success of the industry (Schermerhorn, et al.,
2004). Personal covers for mobile phone, jewelry and home office equipment, bring to light the
value placed on material items.
Principles of Business Ethics (Section 1)
When setting organizational goals, the expected ends determine the goals. Social insurance and
price offerings may be questionable but the competition in the industry shows that it has business
opportunities. Tower insurance is not clear about its official goals but its operative goals provide
concrete steps towards claiming an insurance policy (Limited, 2017).
Rule of publicity
It is not clear whether the marketing tactics used influence the consumer choices but insurance
companies have a challenge of remaining true to their business terms through the publicity rule.
It states the importance of accountability in business. Tower insurance provides adequate

information about its process for getting the claim. Whether this is a marketing strategy or an
attempt to gain consumer trust, it is evident that organizational goals indicate legitimacy (Hatch
& Cunliffe, 2012, p. 269).
Equivalent price and service first principle
The connection between theory and practice where service comes before profits is controversial.
The company’s introduction of technology in its claim structures and processes is an indication
of good will to make the claim process effective. However, there have been complaints about
insurance online system failure and risk evaluation during the pricing process (Ngu, et al., 2012).
Tower Insurance is a business entity out to make profit hence it does not operate like nonprofit
organizations, which promote social good. However, its objective of making money needs a
business model with a monetary process agreeable to stakeholders.
Conscience in business and spirit of service
Changes in the business environment causes a shift in management practices. The Psychosocial
and social processes influencing insurance policies and the spirit of service (Fotaki, et al., 2012).
Individual and groups shape the organizational behavior hence ethical considerations also focus
on these determinant factors. These elements explain the relationship between professionals and
customers in the organization. People have perceptions and individual values, which motivate
their actions (Pinder, 2014, p. 389).
Business strategy and Ethics
Ethics is about mutual benefits and people need to benefit from it. According to Crowther &
Guler ( 2008, p, 100-115) CSR strategy as an ethics strategy presents roles for everyone in the
organization. When the organization grows in profits, it needs to improve its employees’ salaries
and standards. It should also offer customers a good deal. One of these major challenges is in
maintaining ethics in business by incorporating human aspects (Miles, 2012). The insurance
industry as the center of focus has its own barriers. CSR practices improve the society through
immense benefits. Tower insurance must also avoid monopolistic control of the business
environment.

Professional Behavior in Organizational Management (Business Section 2)
The framework for business ethics has a foundation on ethical theories (Hagen, 1965). The
contemporary theories support traditional and normative theoretical approaches. In business, the
descriptive theories describe the ethical situations while the normative provides the general rules
for behavior controls (Turner, et al., 2014). It also provides guidelines for healthy competition
and business practice.
Application of Descriptive Ethics for business entity
Descriptive ethics analyses the moral initiatives in the insurance industry for buyers and business
relationships (Koh, et al., 2014). Tower insurance has business responsibilities towards clients as
well as stakeholders. Unfair competition in which businesses disregard competitors is wrong.
Some ethical elements guiding business values include:
 Accountability in pricing
 Honesty with competitors and clients
 Trust with client information and privacy mode
 Loyalty to customer and industry rule
 Fairness when hiring employee
 Respect for other brands
 Sticking to the legal framework
 Showing concern for clients and employees
 Commitment to duty and excellence
A business gains a good reputation because of its fulfillment of moral duties and contribution to
wellness. This means the business needs to sell products and services that promote the good of
human life (Crowther & Guler, 2008, p. 76). The fact that Tower Insurance has claim-processing
directions on its website is a strategy to portray its image as sincere. This comes in handy
because the industry has an influx of malpractices featuring failure to compensate the clients.
Ethics and functions of managers
Business is the integration of personalist and common good or virtue ethics (Sison &
Fontrodona, 2012). Managerial decisions base their judgments on ethical standing in line with
the organization. The insurance business specifically needs to adhere to high standards because it
has a human face. Its attempt to maximize on profits at the expense of the consumer lowers

credibility on the part of the brand and its industry. Strategic brands have considerations for
personal opinion as well as group efficacy. Unifying these perspectives enhances the
performance of the organization. Ethics protects the organization in the present as well as the
long term (Grant, 2016). Managing change in a global business where best practice is the main
factor of motivation means Tower Insurance needs to stand out from the crowd with unique
policies.
Ethics for buyers
Common good in advertising means a brand will market itself responsibly. Tower Insurance uses
proper words that convince the client without presenting a malpractice. Customers should watch
out for misrepresentation of company products in policy and overcharging its premium. In
addition, providing inadequate information prevents the client from fully understanding the
cover. Although business is about ‘willing buyer, willing seller,’ the public needs protection
from exploitation. (Ford & Richardsine, 2013). It is common to find misleading adverts in print
and digital media. When Tower indicates that a client can pursue a claim, it should be so.
Ethical Dilemma (Section 3)
Ethical dilemma in business occurs when individuals have to choose between doing the right
things and wrong things (Trevino & Nelson, 2016). Globalization comes with threats to human
existence and the sustainability of nature. Therefore, organizations need to adopt a
multidimensional management approach that considers CSR as corporate planning (Crowther &
Guler, 2008, p. 129). Managing organizations in a global environment has challenges and
benefits. The demand for high performance caused by competition in the market environment
adversely affects the ecosystem leading to new trends in CSR (Daft, 2014, p. 68).
Motivational Theories
Maslow
Self-actualization theory by Abraham Maslow shows how people make decisions (Maslow,
1943). These may appear correct to some people but for some it is wrong. In business, self-
actualization needs or highest needs include excelling through experience or exposure.
Sometimes the legally correct option conflicts with personal values. The insurance organization,
state laws and personal principles set ethical standards in this case (Crane & Matten, 2016). The

diagram explains how an employee in insurance can emerge as a leader through self-
actualization.
Figure 1: Explanation of Maslow’s hierarchy and job satisfaction (Dempsey, 2012)
From the above diagram, self-actualization needs such as hobbies, personal growth, training, and
creativity motivate individuals to the right actions. In social dilemma, people have to satisfy their
psychological needs first. A good salary gives an assurance of provision of basic needs. The
lower level needs of safety given by a good working environment encourages work groups to
succeed. When teams succeed, the team leader gets recognition for the performance hence
potential for further growth (Daft, 2014, p. 144).
ERG Theory
An improvement of Maslow’s theory is the ERG theory by Clayton Aldefer (Aldefer, 1972),
which states that people increase competence because of related needs including physical
wellness. In New Zealand, medical insurance is one of the most controversial in insurance claims
and compensations. (Dunedin & Monika, 2014). Tower Insurance medical expenses plan offers
to cater for bills in the event of injury, of sickness. The package also pays for company travel for

treatment and contributes to travel back in the event of death. It would be unethical for the
company to forfeit the agreement in the event of death because the client would not be available
to pursue the claim. It is a good idea that the company has corporate communication, which
updates its clients (Fassin & Buelens, 2011). The right model of communicating needs is to
demonstrate feelings, and ideas. It decodes the organizational goals and provides a response to
customer inquiry about the insurance plans.
Hertzberg’s Two Factor
Frustration occurs due to failure to meet these needs. The two-factor theory by Fredrick
Hertzberg explains this dissatisfaction (Hertzberg, 1968). The theory suggests searching deeper
for reasons causing dissatisfaction. A conflict of interest arises when the Tower Insurance
Company uses is expertise to influence the buyer negatively. Cases of malpractice in the industry
such as misrepresentation and exploitation are common.
Figure 2 Hertzberg’s approach (Bishop, 2016)
The competitive environment means that Tower insurance interacts through formal system under
the guidance of value systems. Although Tower insurance operates under the influence of
organizational rules, it has the legal obligation to provide quality services within its professional
framework (New Zealand Psychologists Board, , 2010). Therefore, customers and employees in

the insurance sector derive satisfaction and dissatisfaction from factors such as work
environment and interpersonal relations. Managers need to use rewards and sanctions, which
influence human behavior in the industry (Ford & Richardsine, 2013).
Sustainability Factors in the Insurance Industry (Section 4)
Interaction patterns in business guide the business processes between an organization and the
customer. Tower Insurance Limited and its clients have a mutual relationship, which enables the
claimant to trust that Tower will pay them even in the event of death. Paying an organization in
advance for risk management raises questions of normative ethics. Rational thinking explains the
right and wrong of human action in the business environment (Board, 2010).
Sustainability and corporate performance
Deontologists explain that people are motivated towards fulfilling certain duties (Israel, 2014). If
Tower insurance maintains value in the business, the industry grows and other organizations feel
the need to uphold good practices. The rule based principle guides businesses in the industry for
future benefits. When some individuals try to exploit the insurance organizations by faking
incidences in order to reap off from the insurance companies, the business is at risk. Self-
regulation guides consumers as well as professionals. Employees in the insurance firm have a
duty to uphold high standards of value. Reports about some employees colluding with consumers
to steal from insurance firms are common (StateWideInsurance, 2017). The fraudulent dealings
are ethical questions of employee responsibility to their duties and loyalty to the organization.
Governments role
Crowther & Guler (2008, p, 29 ) defines stakeholders as crucial persons without whom the
organization wouldn’t be in existence. These are the people and the government. The utilitarian
perspective offers the definition of morality from a maximum good perspective. The government
in New Zealand regulates the insurance business laws in order to prevent malpractice and
exploitation of clients. In the same way, the insurance industry regulates charges in the industry
for its shareholder value. In New Zealand, compulsory third part insurance covers for injuries
and repairs (AA, 2017). The policy considers the overall good and encourages plans. The
government works with insurance business firm owners in order to prevent road accidents caused
by negligence and poorly maintained vehicles.

Organizational objectives
Agent’s virtue theorists like Aristotle reveal how consequentialism theory in ethics guides CSR
practices on the right and wrong of an action. It is unethical for car repair plans to overcharge
insurance plan service providers for repairs (Sayid, 2017). However, this happens even in the
medical care where health care providers overcharge patients who have personal care. Tower
Insurance has its values and norms, which guide how it discharges its policies. It does this with
regard to professional codes of conduct and accountability to the stakeholders. Ethics is
important in industries because it upholds standards and regulations, including advertising
(AANA, 2017). In effect, ethics proposes that business should not just focus on making more
money rather; it should provide customer satisfaction, community support and employee
benefits. Strategic management sets ethical goals for the industry and business environment.
Conclusion
The fact that there is no standard definition of Corporate Social Responsibility in New Zealand
means that stakeholders have personal initiatives to maintain ethics in business undertakings.
The insurance industry comprises of service providers, clients, government, legal bodies and
insurance brokers among others. These have social, cultural and individual values, which guide
their choices. Managerial ethics provide guidelines that determine the ethical and unethical
(Schermerhorn, et al., 2004). Ethical management calls for commitment to codes of conduct,
government regulations and in situational factors. The New Zealand industry is flexible to local
and global ideas of CSR for sustainability. Ethics covers the task oriented, social and individual
values. Defined by different theories they include consequential and non-consequentialist
approaches. These approaches help in the service operations, price mechanisms and business
dynamics. Tower insurance’s introduction of new insurance plans such as boat, rural, caravan
and motorbike needs to be in agreement with stakeholder values. This prevents companies from
devising covers that are beyond claim. Challenges in ethics brings about ethical dilemma, which
occurs during decision-making approaches. The ability to handle conflicts of interests effectively
differentiates the moral from the immoral organizations.

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