THE SCOPE OF ETHICS AND THE NATURE OF ETHICAL OBLIGATIONS

There are few surprises when it comes to insurance, but when they do come they nearly always bring bad news. Such was the demise of HIH Insurance Limited (HIH): both a surprise (to many) and very bad news for many policyholders.

On Thursday, 15 March 2001, HIH received approval from the NSW Supreme Court to place HIH into provisional liquidation. Tony McGrath of KPMG was appointed as provisional liquidator to HIH and 17 of its controlled entities. Provisional liquidation is a temporary form of administration that gives HIH time for the provisional liquidators to review HIH operations and assess the financial position.

HIH insurance is now in run?off, which means it is managing its outstanding claims and not writing any new business. This could take several years to complete; some have suggested as long as 10 years.

HIH comprised several separate government?licensed insurance companies, including HIH Casualty and General Insurance Limited, FAI General

A New South Wales judge froze the assets and multi-million-dollar fortunes of three key figures in the collapsed insurance company HIH.

APRA has no power to ensure that all policyholders have their claims met in the event of insolvency.

While this sort of reaction might be viewed as extreme to some, it really depends on the individual and their belief in the importance of ethics. Personally, I hold ethical behaviour very highly and feel a high ethical standard is a good indicator of quality within organizations. Within the recruitment & accounting industries in particular, ethics in business action needs to be considered and acknowledged as day-to-day transactions are undertaken. While the recruitment industry in particular has come under fire in recent years for questionable ethical behaviour, the industry in general has come along way towards rectifying this negative public perception.

When managers, executives or co-workers are unethical, or engage in behaviour that is ethically questionable, the impact can be astonishing in its diversity and extremity. Many have recounted stories or situations where ethical behaviour was disregarded for profit or advantage (Ethical Egoism: an action is morally right if the consequences of that action are more favourable than unfavourable only to the agent performing the action). One young lady quit a very promising assistant accounting role due to the wildly unethical behaviour of her manager ? and the fact that he expected her to lie for him on a daily basis.

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Approximate Word count = 2456
Approximate Pages = 10 (250 words per page double spaced)