Page 20 - The Insurance Times February 2025

The degree of value of ethics is reasonably high in social and admired; as a result, it tends to ignore the feelings of oth-
relationship capital as it strives to build trust and willingness ers. The result is that despite good intentions and a fair
to engage with stakeholders and creates value that comple- amount of transparency and care for shareholders, most
ments other sources of capital; however, the same inten- customers perceive the business as more inclined towards
sity is not found in other sources of capital. Ethical capital protecting its interests. For example, in health insurance,
must be the core value-creation strategy of all surviving and most companies come out with exhaustive coverages - de-
flourishing organizations. The context of ethical and indi- tailing and explaining well the coverages, but they are so
vidual capital differs - the former is individual in approach, self-obsessed with their products that they forget the
and the latter encompasses the broader communal ap- customer's genuine wants - as a result, lots of cosmetic
proach. While human capital primarily focuses on individual covers are offered to them without trying to understand
economic returns, ethical capital operates within broader their actual wants.
communal contexts where transparency, trust, and fairness
are prime considerations, making it a collaborative process. It also protects itself by putting a copay in each such offer,
Ethical capital encompasses skills, knowledge, cultural or much to the chagrin of the customers. It is enamoured with
social assets and works for the collective well-being of eco- its product so much that it tends to overlook the actual
nomic systems (Prabakaran, 2017). wants of customers and cleverly guards its ostensible offer-
ing as well. Today's market is flooded with flashy offerings
Here is a model (designed by erudite academician -Prof that often go as innovative products. A business in this po-
Madhu Prabhakaran) that will help understand an insurance sition needs to refine some of its decisions. It must come
business's assessment of ethical performance (capital). Eth- out of the self-obsession shell and work for shared gains. It
ics in this model has been shown as the sum total of four is understandably tricky as a business has to work for insti-
deciding and dynamic factors: degree of fair interpretation tutional gains.
of rules, degree of openness, degree of inclusiveness and
degree of concern for shareholder needs. A business can The second quadrant is 'Ethical collaboration' - It has all
take four positions within these broad guidelines. It can pluses. The business believes in shared interest and shows
position itself with strategic heteronomy, exploitive tenden- high consideration towards stakeholders; as a result, all its
cies, ambivalent behaviour and ethical collaboration. actions and decisions are tuned towards this objective. The
actions and activities of the business are highly holistic
Ethical responses are better gauged vis-a-vis their business (cosmisus). The business is open and caring towards all in its
relation with stakeholders, shareholders, consumers, ven- endeavours. It allows an autonomous organization to make
dors, employees, ecology and, of course, the regulatory au- decisions that appeal to all and are fair, transparent, and
thorities. Being Ethical is a process and, therefore, dynamic- inclusive simultaneously. In India, LIC uses ethical collabora-
moving from one extreme (autonomy) to another (heter- tion to build a deep brand, leveraging ethical capital to the
onomy); transparency to opacity, care to apathy and hilt. Its popular policies are transparent and inclusive. It
cosmisus (inclusiveness) to narcissus (self-absorbed perspec- handles death and maturity claims well on time. It is per-
tive). A business's positioning regarding the above deciding ceived as a trusted partner by most customers. While se-
and contrasting factors determines its ethical capital. curing protection during the policy period, the policies gave
reasonable returns on maturity. The fact that it continues
Let me discuss each quadrant. The first quadrant falls in to be the market leader despite enormous competition is a
the category of 'Strategic Heteronomy'. It has two plus testimony to its ethical collaboration and leadership with all
and two minuses. The degree of fair representation of rules shareholders, particularly the customers.
suffers here as rules are leveraged for institutional gain (LR s.)
The business tends to become unethical when it makes de- Our assumptions about 'homo oeconomicus', or economic
cisions guarding its self-interest. In its decision-making, it is human, were somewhat hazy. We presume that they could
perceived as fair as most of its decisions are transparent and make rational decisions. However, the model fails to read
care about its different stakeholders, particularly its custom- people's actual behavioural patterns. It may be noted here
ers, somewhat reasonably. The business tries to reach out that understanding and predicting insurance purchasing
to them with wider choices. Still, the degree of narcissism decisions is a complex decision-making process rooted in
(self-obsession) tends to be very high. behavioural science. Most customers' decisions depend on
how the various choices are presented to them. The appeal-
The business becomes an attention seeker and wants to be ing and meaningful way choices are significantly framed

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