Page 63 - MARKETING & PUBLIC RELATIONS EBOOK IC88

2. Insurance is based on the principle of Uberrima Fides or utmost good faith. This requirement is
mutual, binding on the insurance company, as much as it is binding on the policyholder.
Consumer interests are automatically taken care of, if the insurance company adheres to these
principles. An agent represents the insurance company and is therefore, bound by these
principles in the same way as the insurer is.

B. BUSINESS ETHICS

(a) Understanding Ethics

1. Ethics deals with questions of right and wrong. Business ethics deals with questions of right and
wrong in business. What is wrong in daily life could become right in a business context. Ethics is
contextual.

2. There are often grey areas as to what is right and wrong. It is considered proper for business to
make profits by charging prices higher than the cost. But what is the level of profit margin that is
proper? At some point, profit making becomes profiteering, and that is not acceptable.
Commissions are normally paid in business, to those who promote the company's interests, like
dealers and agents. But sometimes, such commissions are considered wrong and are called
kickbacks or bribery.

3. These differences may arise out of the relevant legal position, as in the case of the Bofors gun
purchase in the 1980s and the Augusta Westland helicopters deal in 2012, where commissions
were specifically prohibited. But even if there were no specific law on that subject, as in the case
of purchases by private companies, it would be wrong if the purchase manager's decision to buy
depended on the amount of commission (really bribe) that he was offered by the vendors.
Would it still be wrong, if the purchase was justified on the merits of the case? Would it be
different if no money was paid to the purchase manager, but some money was paid to a relative
of his in a distant town or his son had been working in the vendor company?

4. Standards of rights and wrongs are called values. They vary between persons. They are not
taught. People acquire their values from what they are exposed to in family, in school and in
organisations, through friends, teachers, books, journals, cinema, T.V. etc. However, it is
generally believed that the following would be wrong in the context of interactions between
individuals.

 It is wrong if one's actions cause harm to another. Harm' will include all violations of the other's
rights.
 It is not wrong to look after one's interests (to be selfish). But it would be wrong to do so at the
cost of another's interests.
 Cheating and breach of trust cause harm to the interests of another and are therefore, wrong.

(b) Ethics is not Law

1. What an individual or a company does, depends on the values, not on the sons of the law.
People are considerate to each other causing civilized beaviour in communities, because they

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010