BUS320 Corporate Governance Assessment: Youi Insurance Ethical Issues

This report provides an in-depth corporate governance assessment of Youi Insurance, focusing on ethical issues highlighted by the Banking Royal Commission. The analysis delves into the company's practices, particularly its treatment of customers affected by natural disasters, and examines how these actions relate to corporate governance theories. The report applies stakeholder theory, corporate social responsibility (CSR), and ASX principles to evaluate Youi's decisions and actions. It critiques the company's performance, highlighting the impact on stakeholders and discussing the implications of the ethical breaches. The report also explores ethical frameworks and justice theories to provide a comprehensive understanding of the case, offering insights into how corporate governance impacts business practices and stakeholder relationships, providing a valuable resource for students studying business ethics and corporate governance.

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CORPORATE GOVERNANCE ASSESSMENT
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Executive summary
The purpose of this paper is the application of corporate governance theories to real
ethical cases that face organisations. Through research from scholarly articles and news website
page, some important findings were found. These findings include; Youi ethical issues that
Banking royal commission is questioning. In summary, Youi insurance company based in
Australia neglects its customers who faced natural calamities that they were insured against.
Finds shows that the company ignored two of its customers for over one year. Youi insurance
company, under the recommendation from the Australian Security exchange governance
practices, availed; it found that the company is not entirely aligned to the proposals. Through
libertarian and Rawls’ justices, a conclusion is made for Youi’s cases.
Introduction
Organisations are entities that exist in a community with a sole purpose to maximise
profit for the company’s financial survival. Corporate managers come up with genius ways of
extracting money from the consumers; some of their methods are legal while others are not.
While managers are striving to increase their company’s financial figures, some boundaries
might be overlooked leading to unfair business practices. These discriminatory practices could
cause harm to the stakeholders and the community. Therefore, the concept of corporate
governance is established to monitor the business conducts towards the society, lest the
companies prosper in the expense of the community through unfair trade practices. Here, Youi’s
ethical issues are discussed in the view of corporate governance theories researched through
scholarly articles.

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Background and Ethical Question
Two victims, who thought they were insured by Youi insurance Company, found
themselves stranded after major hits of natural catastrophes. Ms Murphy, a mother of three, has
been struggling with her insurers over the natural calamity that faced her on November 2016.
She reported the Hailstorm issue to her insurers hoping to be compensated for her roof and car,
however, her efforts proved futile. She has had to live with the damaged roof for over one year
after the catastrophe (Hamilton 2016 p 48). Still, another Youi’s customer complaints were
raised concerning the company’s ways of providing slow service or even delaying at the expense
of customers suffering. Glen Sutton from Queensland has the full experience of the firm’s
incapacity to do right by their customers. After a disastrous hit of cyclone Debbie on March
2017, Sutton and his family have been forced to live in the most undesirable living conditions.
They have had to live in many temporary accommodations since their house was not fit to live
in.
Company’s background
Youi insurance is an Australian company that was founded on March 2018. The company
is privately owned and is a subsidiary of OUTsurance international Holding which is also part of
merchant insurance holding. Under the appointed Chief Executive Officer, Frank Costigan, the
company is striving to establish a strong brand name in Australia as one of the players in the
insurance market. Currently, the company offers products ranging from vehicle, home (building
and content), watercraft and business liability. Youi prides itself in their strict adherence to the
set code of practice that has, within it, the predetermined standards of practice towards their
customers (Outreville 2012, p 3). Their main slogan that also provides a framework within which

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the company conducts itself is “awesome service” for its entire customers. Recently, Youi
insurance is facing vigorous scrutiny from Banking royal commission for serious ethical issue.
In that context, the firm’s vivid negligence towards the customer is wanting as it has
managed to capture the attention of the Banking royal commission. The service rendered to their
two clients, evidently, has been beyond the company’s standard and code of practice (Naylor
2017, p 120). Youi insurance firm does not show “awesome service” from the two clients’ cases
availed above. Concerning the ethical question, the issue above could be paraphrased to; how
unethical practices in the insurance sector, affects both the customer and the insurance company.

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Corporate social performance
Corporate social performance model was developed to keep the firms within the
parameters of being socially responsible (Holme and Watts 2005, p 4). It contains three elements
to it, the first one being the social responsibilities category; in this, the firm’s elements such as
discretion responsibility, ethical, legal and economic responsibility are examined (Wood 2010, p
53). Secondly, social responsiveness category where a company’s way of responding to social
issues concerning them are determined to know the level of their social responsibility to the
community they operate in and lastly, social issues of stakeholder.
Social responsibilities
Discretion responsibility
This is the volunteering capability of a company to the society. Depending on the interest
of the organisation, companies have the free will to engage in any philanthropic activities for the
benefit of the society (Jamali and Mirshak 2007, p 246). For instance, Youi insurance company
has been in many volunteering activities that benefit many Australian. To exemplify this,
recently, Youi as corporate was involved in a farmers fundraising where they rose over $20000
for the well being of farmers and their project.
Economic responsibility
The most fundamental aspect of an organisation to the society is to be the economic drive
power to the community (Heal 2005, p 403). Corporate has a burden of availing goods and
services that the community needs to ensure their economic aspects are stable for the continuity
of the society. Youi insurance company has managed to capture the economic needs of its
society. Through Youi insurance firms, the society gets products ranging from vehicle, home
(building and content), watercraft and business liability. This type of business is of importance to

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Australians for they are insured against natural calamities such that befall on Ms Murphy, which
most cases are beyond the individual control.
Ethical responsibility
Beyond the legal requirement of a business, there are societal expectations that exist from
communities. Although not distinctively defined, a firm is expected to act, in its decision
making, morally and just, relatively to the society (De Hoogh and Den Hartog 2008, p 307).
When present in the court, Youi as a firm, accepted that it had not acted as ethical as to their
standards required. They acknowledged their misdeeds to Ms Murphy and Mr. Sutton by
delaying the house repairs caused by the natural calamities that they were insured against of
which it should not have happened at all.
Legal responsibility
Although a societal expectation is put on companies to improve the community’s
economic activities, it is expected of them to do so within the statutory requirement of the
country (Ni and Wart 2015, p 176).Youi insurance firm is within the legal parameters of the
country. It is under the regulation of Australian Prudential Regulation Authority (APRA) as well
as a member of the Insurance Council of Australia. These regulatory bodies ensure that Youi acts
as per the stipulated law of the country concern insurance firms. Therefore, there exists no reason
as to why the firm delays customers’ claims for over a year
Corporate shared values
To ensure the firm’s financial continuity and its well being the firm has to link its values
with that of the society. A Company’s long-term survival tactic is to get close to the environment
to which they conduct business; this means working closely with the society (Dempsey 2015, p
338). For instance; Youi has involved itself in numerous projects that could potentially add value

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to the society and them as well. As insurance firm, Youi has grabbed the opportunity and its
working closely with Red Cross to donating blood that ends up saving over 2000 Australian
lives. Such strong initiative should not be tarnished by their firms’ incapability to renders
services for the two clients with damaged roofs.
These corporate social responsibilities are designed in a way that accommodates and
touches everyone affected by the decisions made by Youi insurance company. In other words,
Youi decisions directly affect the company’s stakeholders of which, the community is one of the
major stakeholders (Garvare and Johansson 2010, p 740). Therefore, the Australian community
has rights to consider business activities as beneficial or hazardous to them.

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Stakeholder theory
Stakeholders are among the many factors that could affect the achievement of
organizational goals and objectives. To further explain this, stakeholders are individuals who can
be affected by the organization’s operations or affect the company from reaching its goals. In
respect to that, it evident that these individuals could be many depending on the company’s range
of influence. The theory urges that it is of benefit to the company if the directors pay attention to
the needs and interests of non-shareholder stakeholders ((Rose 2007, p 327)). The theory has a
particular inclination toward normative validity, the purpose of the organization. This purpose
covers and reflects on organization’s ethical standard. The central argument of the theory is that
the loyalty of the non-shareholder stakeholder influences the prosperity of the organization. Also,
as per theory, directors are responsible for protecting the interest for stakeholder since they do
not have the right to vote or regulate the company.
Stakeholder Analysis
There are five fundamental questions to be answered in a bid to analyze the stakeholders
effectively.
Does the stakeholder have a crucial impact on the organizations?
Youi insurance company has numerous stakeholders that have a different impact on the
organization. The most vital of them is the shareholders who have stock shares of the company
(Ayuso and Argandoña 2009, p 2). For example, the principal investors of Youi insurance are the
Rand Merchant Holdings that have 58% shares on the mother company OUTsurance. Second on
the list is the customers; they are the sole reason for the conduction of business. Therefore, they
should be served with utmost care with no delays of service rendered to them.
What does the organization want from its stakeholders?

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Youi insurance is focused on growing the firms’ brand to be the most recommended
brand among insurers. They want from their customer, loyalty as well as revenue for the
financial stability of the firm (Dempsey 2015, p 323). From the community, Youi seeks support
and acceptance from the community evidenced by the many community service done. The firm
wants continued support from its shareholders and professionalism from the employee.
Are the relationships dynamic?
Youi relationship with the community is dynamic; it continuously grows day by day as
the company continues to engage in social responsibilities. Also of dynamic is the customer's
relationship, besides a few sets back, for instance, Mr. Sutton and Ms. Murphy’s cases, the
company seeks to increase its market share throughout the country
Can the firm easily exist without or replace the stakeholder
Youi Company cannot survive without any of its stakeholders since majors stride have
been made toward establishing a long-lasting relationship. This is among the company’s strategy
for achieving longer-term goals
Are the stakeholder been identified through another relationship?
Youi insurance company sees consumers differently from the community yet the same. In
that, the company’s customers comprise of the community, yet not all community member are
their consumers of their products. Therefore, as they perform their civic duty to the society, they
do it in such a way they impress both the customer and the community through the shared value.

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Discussion base on ASX principle and recommendation
Most of the decision that an organisation makes concerning business ventures are from
the board of directors. They are responsible of the strategies of the company and the overseers of
the company’s conducts. Similarly, Youi insurance company also has a board of directors who
have been assigned different sections and responsibility. Francis Costigan is the CEO and
director of Youi holdings; he has duties over his fellow executive member and to the company as
well (Tsui et al. 2006, p 130). Daniel Matthee is the company’s Executive director; he is
responsible for managing the company in accordance with the strategies set by the board of
directors (Dibb et al. 2005, p 850). Finally, the board is chaired by C.Corfe who manages and
avail leadership to the board member as a whole. Worth mentioning is Claudine Ogilvie, who
has recently joined the board as a non-executive, she brings her expertise of technology, cyber
security and to deliver customer-focused strategies that will see the company to new heights.
Being a member of Australian Securities Exchange, the body has outlines principles
recommendation on corporate governance practices. These set practices are set in efforts to
hinder such occurrences of misconducts where customers complain such as Murphy and Sutton
faced. In accordance to the Council’s recommendations the company has to;
Layout foundations for management and oversight
In this sector, Youi insurance company has managed to do relatively well. There is a
sound layout of management of the company, board members and directors are assigned
responsibilities as per the company policies and the council’s recommendation (Bear et al. 2010,
p 218). To exemplify, as aforementioned, the Chief Executive of the company is Francis
Costigan who is the overall overseer of the company’s direction with the help of seven other

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board member. The number is sufficient to have handled customers complain that would have
otherwise not reached the Banking royal commission’s attention.
Structure the board to add value
This category requires the company to have adequate numbers of board members who are
committed to their duties. The size of the board member is enough, where some of the board
members have vast experience in the insurance sector for almost ten years. This is yet to explain
the slanginess found in executing the company’s service to its customers. Therefore, the delays
experiences of the two clients are doing more harm than good to the firm.
Promote ethical and responsible decision making
While the better part of the company’s decisions has been within the parameters of moral
responsibility, from the recent cases, it would be safe to mention that the company strayed off the
main ethical road (Ruedy and Schweitzer 2010, p 74). Nothing close to moral nature is
represented in forcing a family to live in temporary houses due to their negligence of duties to
their customers and an abstract sense, the community.
Safeguard integrity in financial reporting
The council recommends that firms establish honesty and transparency in the financial
report. The auditing team should be chaired by independent individuals and should have at least
three members. Youi Company has met all the standards and requirement tailored following the
firms’ policies.
Make timely and balanced disclosure
Youi insurance company has been working within the stipulated Council’s
recommendations, therefore have little or no disclosure to report. However, concerning principle

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number three of ethics, the firm delayed customer claims for over a year. Thus, ethical standards
were not met. Hence, this deserves a disclosure.
Respect the right of shareholders
Youi being a subsidiary of OUTsurance Company that has Rand Merchants investment
holdings as its principal shareholder respects its shareholders (Goga 2014, p 96). Although the
primary interest of the shareholder in gaining profit, also maintaining an acceptable ethical
standard that does not go beyond Murphy’s case could be their interest as well. The company
needs to rectify the circumstances to do right by their shareholders.
Recognise and manage risk
Council’s practice recommends that the company should have a system that manages risk
for the company (Council 2007, p 23). A bad reputation is a potential risk the Youi business;
hence, the management ought to have handled the customers’ issue in a better way before
reaching the Banking royal commission.
Remunerate fairly and responsibly
Youi insurance company has set the requirement in accordance with the Council’s
recommendation for remuneration. The company offers employees numerous opportunities to
climb through the corporate ladder where there are significant financial rewards relative to the
weight of their duties and responsibility.