International Journal of Business and Social Science

Vol. 2 No. 1; January 2011

Factors Influencing Unethical Behavior of Insurance Agents

Dr Hasnah Haron
Professor and Dean, Graduate Business School
University Science Malaysia (USM) Penang
E-mail: hhasnah@usm.my
Dr Ishak Ismail
Associate Professor and Dean, School of Management
University Science Malaysia (USM) Penang
E-mail: iishak@usm.my
Dr Shaikh Hamzah Abdul Razak
Lecturer of Wealth Planning and Management
International Centre for Education in Islamic Finance (INCEIF)
Kuala Lumpur, Malaysia
E-mail: shamzah@inceif.org

Abstract
The study investigates the relationships between supervisory influence, role ambiguity and sales target on
intention to perform unethical behavior. It also examines how attitudes, perceived behavioral control, subjective
norm and moral obligation mediates the relationship of supervisory influence, role ambiguity and sales target on
intention to perform unethical behavior. The respondents of the study comprise 246 individual insurance agents.
The result of the study shows that there is a relationship between supervisory influence, role ambiguity and sales
target on intention to perform unethical behavior. The study found that attitude partially mediates the relationship
between supervisory influence, role ambiguity and sales target on intention to perform unethical behavior.
Subjective norm and moral obligation was found to partially mediate the relationship of supervisory influence
and role ambiguity on intention to perform unethical behavior. The implication from this study shows that there is
a need for constant monitoring, support and encouragement and making sure clear roles are presented and sales
targets sets are achievable to the insurance agents in order to minimize their unethical behavior.
Keywords: Unethical behavior, role ambiguity, insurance agent, moral obligation, sales target
1. Introduction
In Malaysia, prior to 1997, the insurance companies are operating as a private company governed by the 1963
Insurance Act. However with the enactment of the Insurance Act 1996 which came into force on 1st January 1997,
all insurance business are licensed by the Ministry of Finance and it has to be a public company under the
Companies Act 1965. The Insurance Regulations 1996 is part of the Insurance Act 1996 which prescribe the
details of mandatory requirements contained in certain provisions of the Act. Under the Act, Bank Negara
Malaysia is empowered to specify matters pursuant to the Act. Insurance business growth is in tandem with the
domestic economy. For 2005, the insurance industry recorded a growth of 6.9 percent in combined life and
general premium income to reach RM23,564.6 million. The life industry premium growth was 0.6 percent at
RM6,701.4 million, attributed largely to the scaling back of sales of capital-guaranteed investment-linked
products. (Insurance Annual Report, 2005).

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