Article: Life and Health Insurance Industry Investments in Fast Food

Renee Latoures

March 12, 2013

N706/BAJ

Scholarly Article Review

Article: Life and Health Insurance Industry Investments in Fast Food.

Purpose: The purpose of this article was to investigate life and health insurance industry’s investments in fast food.

Research Problem: Life and health insurance companies profess to support health and wellness yet they financially invest in industries that seem to contradict their position of health and wellness? Besides the tobacco industry little data exists indicating what other questionable investments the insurance industry makes.

Summary: Fast food can be consumed responsibly however when not consumed responsibly can lead to many health issues. Furthermore, marketing and sales of fast food undermines the public’s health and wellness. Insurance companies missions statements aim to support health and wellness, yet a disconnect exists where they invest in harmful substances such as fast food, tobacco, etc. Major insurers own $1.88 billion dollars of stock in the 5 leading fast-food companies representing 2.2% of these company’s shares as of June 2009. One insurance company invested $318.1 million out of their total $422 million dollars of investments in McDonalds alone. Another company owned $366 million in fast food stock with $267 million in McDonalds alone. These companies who say they support health and wellness are substantial investors in the fast food industry. Their choice of investments seems inconsistent with their industry of life, health and disability insurance. There are different reasons they might invest in harmful products including that they are profitable and the profits out weight the liability associated with their policyholders consuming these harmful products. Secondarily, they may not fully comprehend the social impact of their investments on the public and in return on their business because traditionally very little attention has be focused on this issue. Lastly, because some insurance companies are very large with divisions focusing on life, disability and health insurance but with many other divisions as well, if these health related divisions are outweighed by other types of policies they may not be a priority for the overall company. Therefore, the company overall may invest as a whole in profitable investments and the underwriting departments of the life, health and disability departments may have little say in how these investments are made.

Strengths: All data was collected from the same comprehensive database. Data was only gathered on investments in the five leading publicly traded fast food companies. Of the top five companies, some were independent companies such as Burger King, Jack in the Box, and McDonalds and some were groups such as Wendys/Arbys and Yum! the owner of KFC, Taco Bell, Pizza Hut and others. This was sufficient for the study because selecting the top 5 companies captured more than 5 fast food restaurants data, it captured data from over 10 major fast food companies. Therefore utilizing the top 5 publicly traded companies included more than just 5 fast food restaurants.

Weaknesses: Data was gathered on the top 5 publicly traded fast food companies, however, there are many more fast food companies besides these that the insurance industry could invest in and this data was not captured and could have increased their overall market share percentage significantly and changed their investment statistics overall. Also, statistics of how many holdings each company had in fast food was represented but not the percentage of their total holdings these were. That data would help put into context their investments in fast food.

Conclusion: The most ethically responsible thing for these companies to do is not invest in potentially harmful products when they are in direct conflict with their businesses. If they are not willing to do this, they should use their leverage as major stock holders to force the fast food companies to behave more responsibly in accordance with public health principals. This could include restricted marketing, improved nutritional quality of the food, etc.

References

Mohan, A., McCormick, D., Woolhandler, S., Himmelstein, D., & Boyd, W. (2010). Health Policy and Corporate Influences. In Estes, C. et al (Eds.). Life and Health Insurance Industry Investments in Fast Food. (pp. 120-124). Burlington, MA: Jones & Bartlett.