Investments purchase strategy based on ethics

Investments Purchase Strategy Based on Ethics
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Introduction
In the quest to obtain as many clients as possible, many insurance companies fail to explain to customers the package that its insurance policies entail. Customers rely on agents to explain to them the policies as most of them only view insurance like car insurance as an essential government rule that they need to follow. Policyholders rely on the ethical mercy of agents to guide them on which policies that fit its needs. A solid ethics program is an important element to a successful insurance company or any other business. Ethical standards ensure that the company does not exploit its clients. This paper analyses the importance of good ethical practices, the ethical challenges that insurance companies face and the reasons behind the success of other insurance companies.
Some of the challenges and practices that affect many insurance organizations include hiding of information or clauses in the policy. Clauses such as increment in annual revenues or not specifying what the policy covers can mislead policyholders. Another challenge is disclosure. Some agencies fail to disclose to customers all that entails an insurance package which causes future problems when the customer finds out what they are paying for is not exactly what they want. Falsification of information whether unintentional or intentional can happen when an agent does not explain and ensure that the customer understands what the policy states.

Misrepresentation of information can also lead the policyholder to make a poor choice of policy packages.
Industry Discussion
Allstate is the second largest insurance company in the United States. Complaints over the years have been raised based on how they handle the policyholder claims and the poor treatment given to its agencies. Aflac (American Family Assurance Company) is another insurance company providing its services to more than 50 million people in the world. It functions by providing funds to cater for medical emergencies for its policyholders. Aflac policyholders have praised it over the years for its amazing services and focus on the policyholder. Nominated for the World’s most ethical companies by Ethisphere and has been featured on Forbes magazine, Aflac is the representation of ethics (Smith, 2013).
Insurance companies just like Aflac and Allstate have one thing in common; the need to create profits and offer required insurance services to the American people. Health insurance come in handy for individuals like in the case of injuries or accidents that require immediate medical care. The financial blow from medical bills is lower in patients with health insurance that those who entirely depend on the money they have to clear their medical bills. The need for insurance services among people is what fuels the growth of this lucrative business.
Both Aflac and Allstate poorly treat its workers, though the case for Allstate is far much worse that Aflac. In the case of Aflac, some workers complained of a lack of salary and little to no support while they were out in the field. Some of the Allstate employees complained of victimization of its rights as the company forces them to sight a document that binds them to it and strips them of its power to involve the law in the matter. In both companies, all the profits go to the shareholders leaving the agencies without much. The main difference between the two companies lies on how they treat its policyholders. While Allstate focuses on nothing else other than its profits which results in poor treatment of policyholders and withholding of its claims, Aflac pays its customer claims on time.
Ethical Challenges
Allstate has faced some negative ethical issues including delaying customer claims and failure to pay some of these claims. By retaining customer claims, Allstate, and its shareholders were making full profits on account of its customer’s losses. Policyholders were offered very low payments for its injuries and denied the right to file complaints against this. While delaying customer’s claims, Allstate was counting on the fact that filing complaints through lawyers would be too expensive and possibly take a long time making the customers drop its charges. During its investigation, Allstate was reluctant to hand over its files and computer information to the federal. After the hit from Hurricane Katrina, governmental laws prevented insurance companies from dropping clients, but Allstate still found an excuse, by creating a new policy, which they claimed allowed them to drop clients. “Allstate dropped 5,000 clients who had been hit by Katrina, and tried to create a loophole for dropping clients even when a law prevented insurance companies from doing so.” (Anderson, 2014).
A study conducted on an ethical dilemma in selling complex services such as insurance policies revealed that most customers while purchasing policies are usually at the complete mercy of the agents to explain to them which policies suit them best. Most policyholders know very little about their policies, and thus when they need to collect their claims, it becomes very easy for insurance companies to trick them and deny them their rights (Hoffman, Howe, and Hardigree, 2013). Aside from the fact that those hit by Hurricane Katrina were policyholders, Allstate still finds a way around them to ensure that they evade paying back the claims.
Allstate was also involved in manipulation of its staff to prevent them from seeking legal assistance. Allstate manipulated its agents into thinking that they were being promoted to private contractors and ended up signing an agreement that made them lose their pension benefits, health insurance, and retirement funds among other privileges. The agreement also stripped them of their rights to seek any legal action or assistance to sue against Allstate. Allstate’s manipulation of its employees ensured that they were defenceless against them and had no way out that would not lead to severe consequences. Failure to sign the agreement meant that one would automatically lose his or her job and their investment in the company.
Ethical Successes
One of the factors that ensure the ethical success of an insurance company is paying of policyholders claims without delay. Aflac is an insurance company that upholds this rule, making it one of the best insurance companies in the United States. The year 2015 marked the ninth’s listing of Aflac in the Ethisphere’s list of The World’s Most Ethical Companies. (“Aflac Named to Ethisphere’s World’s Most Ethical Companies List,” 2015). Aflac attributes its success to how they treat they, customers ensuring that they keep them satisfied. Aflac pays its claims fast after the customer has requested for it, taking about four working days to release a customer’s claim. By doing so, they allow the customer to focus on other things such as recuperating in the case of an illness. Its coverage is also efficient as it pays the claim directly to its customers as opposed to other insurance companies that pay the coverage to the hospital. It is Aflac’s proper treatment for its customers that attracts more and more customers to it.
Aflac prides itself on being the number one provider of renewable insurance in the Unites States. Most insurance companies hide additional charges to the yearly renewal of policies. Aflac agencies offer a proper explanation to new clients on what the different policies available entail, its cost, and benefits allowing them to choose what fits them best.
Ethical success in an organization depends on the commitment of those working in the organization to uphold good moral values and ethics. For ethical success to be there in insurance organizations, the companies should hold annually scheduled refresher training short courses for agents to remind them of how they are supposed to perform its duties and the core values of the company that they should base its actions.
Recommendations
The best insurance to invest in based on the research on ethical practices would be Aflac. Over the years, Aflac has appeared among “The top ethical companies in the world” list. Aflac would not have acquired this position were it not for its beliefs and philosophy, that in obtaining its profits they should first consider the moral principles, that dictates whether or not the means used to obtain the profits were correct. The Allstate insurance company is involved in various deceitful cases against both its employees and its policyholders and would thus be a risky company to invest in. By withholding its files and computer data during its investigation, they pose more concerns of whether they are involved in just more than one deceitful deed as such the Aflac company would be a better choice of investment.

References
“Aflac Named to Ethisphere’s World’s Most Ethical Companies List”: Company Celebrates Nine Consecutive Years on Prestigious List. (2015). Retrieved from http://www.prnewswire.com/news-releases/allstate-named-as-a-2015-worlds-most-ethical-company-by-the-ethisphere-institute-300047009.html
Anderson R. (2014). “Allstate’s Bad Behaviour in Claims, Towards Clients, and with its Own Agents” Retrieved from http://bighornlaw.com/allstate-bad-behavior-claims-clients-agents/
Hoffman, K. D., Howe V. & Hardigree D. W. (2013). “Ethical Dilemmas Faced in the Selling of Complex Services: Significant Others and Competitive Pressures.” Journal of Personal Selling & Sales Management. 11 (4), 13-25. Retrieved from http://www.tandfonline.com/doi/abs/10.1080/08853134.1991.10753886
Smith J. (2013). “The World’s Most Ethical Companies” Forbes.Retrieved from http://www.forbes.com/sites/jacquelynsmith/2013/03/06/the-worlds-most-ethical-companies-in-2013/#652b1bab6e66