The ethical decisions of life insurance salespeople: the effects of interest conflicts, ethical leadership and ethical training
| DOI | https://doi.org/10.1108/JFRC-01-2021-0001 |
| Published date | 03 June 2021 |
| Date | 03 June 2021 |
| Pages | 371-386 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation |
| Author | Li-Tzu Lai,Jui-Yun Wu,Lu-Ming Tseng |
The ethical decisions of life
insurance salespeople: the effects
of interest conflicts, ethical
leadership and ethical training
Li-Tzu Lai
Taichung Bank Insurance Brokers Co., Ltd., Taiwan, Taichung, Taiwan, and
Jui-Yun Wu and Lu-Ming Tseng
Department of Risk Management and Insurance, Feng Chia University,
Taichung, Taiwan
Abstract
Purpose –Life insurance salespeopleare hired to pursue the best interests of life insurerson the one hand,
the salespeople are also expected to pursue the best interests of customers on the other hand. However, the
best interests of life insurers are not necessarilyconsistent with the best interests of customers. This study
aims to investigate the influences of interest conflicts on the lifeinsurance salespeople’s ethical attitude and
ethical intentionby focusing on the role of ethical leadership and ethicaltraining.
Design/methodology/approach –Four types of interest conflicts are studied. Questionnaires are
administered to a total of 757 full-time life insurance salespeople. Data analysis is performed by using
analysisof variancetests and partial least squares regression.
Findings –The main results indicate that the types of interest conflicts change the life insurance
salespeople’s ethical attitude andethical intention. Moreover, ethical training could make the life insurance
salespeoplebecome more concerned about the interests of customers,but not the interests of life insurers. The
results also challengea belief that ethical leadership and ethical training will often havedirect, consistent and
significantimpacts on the ethical attitude and ethical intentionof life insurance salespeople.
Originality/value –Interest conflict is an important issue in the literature on financial regulation. The
potential for life insurance salespeople to behave unethically has also received extensive attention by
researchers. Thisstudy provides clarification of the relationships among interest conflicts,ethical leadership,
ethical training and ethicaldecision-making of life insurance salespeople. This is the first study that analyzes
the relationships.The results of this study may provide some contributions to the relevantliterature.
Keywords Ethical leadership, Ethical attitude, Ethical intention, Ethical training, Interest conflicts,
Life insurance salespeople
Paper type Case study
Introduction
Researchers have shownthat some life insurance salespeople tend to benefit lifeinsurers by
insurance products misselling, while some bank employees tend to benefit their customers
by granting illegal loans (Ahmad, 2013;Brannan, 2017;Chen et al.,2019;Tseng and Yu,
2019). The examples above show that the best interests of financial service companies are
not necessarily consistent with the best interests of customers. In many cases, striving for
the interests of financial service companies may against the interests of customers, while
striving for the interests of customers may also lead to the inability of the companies to
achieve their financialgoals. The wish to reconcile the interest conflicts of the two principals
Ethical
decisions
371
Received6 January 2021
Revised3 March 2021
Accepted4 March 2021
Journalof Financial Regulation
andCompliance
Vol.29 No. 4, 2021
pp. 371-386
© Emerald Publishing Limited
1358-1988
DOI 10.1108/JFRC-01-2021-0001
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1358-1988.htm
(i.e. financial service companies and customers) could be difficult for the financial
professionals (Wirtz et al.,2003;Cortez and Johnston, 2019). Some studies even point out
that, in some cases, the financial professionalscannot reconcile the interests of all principals
(Sah, 2017;Gaertner,2019).
This study checks whether or not ethical leadership and ethical training affect the life
insurance salespeople’s ethical attitude and ethical intention under the interest conflicts
between life insurers and customers. Ethical leadershipis the demonstration of the leaders’
integrity and morality to their followers through leadership skills and interpersonal
communications (Engelbrecht, Heine and Mahembe, 2017;Saha et al.,2020). Previous
studies have shown a positive relationship between ethical leadership and employee trust
(Mo and Shi, 2017). Some studies then point out that ethical leadership has significant
influences on job satisfaction, loyalty and ethical behaviors (Tseng and Wu, 2017;Qing
et al.,2019). As ethical leadership is an important element of ethicaldecision-making, ethical
leadership may also relate to the ethical attitude and ethical intention of life insurance
salespeople. There are no studies that have identified a mechanism showing how ethical
leadership would influence the ethical attitude and ethical intention of life insurance
salespeople in situations that involve interestconflicts. This study investigates the impacts
of ethical leadership on ethical attitude and ethical intention, and the roles of interest
conflicts are consideredin the analysis.
This study then examines the effects of ethical training on ethical attitude and ethical
intention. Regulatory authorities require the financial service companies to incorporate ethical
training into their formal policies (Weber, 2012). A good deal of research effort has also been
devoted to understanding ethical training, and it is believed that ethical training could reduce
unethical behaviors in financial organizations (Frémeaux et al., 2018). As ethical training could
change ethical decision-making (Elbe and Brand, 2016;Kancharla and Dadhich, 2020), ethical
training may be related to the ethical attitude and ethical intention of life insurance salespeople.
Nonetheless, no studies have considered the effects of interest conflicts when examining the
relationships among ethical training, ethical attitude and ethical intention. Besides this, the
studies linking ethical training and ethical decision-making have found inconsistent results
(Wang and Calvano, 2015). A possible reason for the inconsistent findings could be that
the studies do not control for other variables (such as interest conflicts) that may affect the
association between ethical training and ethical decision-making. This study considers the
effects of interest conflicts, and examines the impacts of ethics training on the life insurance
salespeople’s ethical attitude and ethical intention.
The conceptual modelof this study is shown in Figure 1. As can be seen in the figure, it is
proposed that interest conflicts, ethicalleadership and ethical training will affect the ethical
attitude and ethical intentionof life insurance salespeople.
Figure 1.
The conceptual
model
H7
H6
H5
H4
H2
H3
H1
Ethical leadership
Ethical training
Ethical attitude
Ethical intention
Interest
conflicts
JFRC
29,4
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