How are insurance companies and fast food linked?

Insurance companies and fast food

Who would you say are major investors in the fast food market? Well believe it or not, companies providing life and health insurance are major investors in the fast food market. On June 11, 2009, they owned an astonishing $1.9 billion worth of stock in the fast food industry, researchers reported online in the American Journal of Public Health.

The investments were in the five largest fast food corporations - Jack in the Box, McDonald's, Burger King, Yum! Brands (KFC, Taco Bell , Pizza Hut, and others), and Wendy's/Arby's, according to J. Wesley Boyd and colleagues from Harvard Medical School and Cambridge Health Alliance in Massachusetts.

Their data showed that life and health insurers are substantial investors in the fast food industry. Although fast food can be consumed responsibly, the marketing and sale of products by fast food companies is done in a manner that undermines public health. Though investing in companies whose products undermine health whilst selling life or health insurance may seem inconsistent, there are several potential explanations, the report stated.

The first is that the practice has net profitability: the Return On Investment (ROI) in fast food companies more than offsets the potential financial liability associated with their policyholders consuming fast food. A second possible explanation is that insurers are unaware of the social impact of their investments as there has been little attention paid to the issue historically. A third possible explanation is that because insurers tend to be large organizations, one division (e.g. claims and underwriting) may be unaware of the activities in another (e.g. investments). And, finally, some of the larger investment companies have subsidiaries whose investments are made in the name of the parent company, even though the parent company might have little actual oversight of its subsidiaries' investments.

"The insurance industry, ostensibly, appears to be concerned about people's health and well-being," Mr. Boyd said to ABC News.

But, he said, "If the insurance industry is willing to invest in products known to be harmful and/or kill people then, prima facie, this is not an industry that actually cares about health and well-being."

Fast food investments

To determine the extent to which insurance companies invested in the fast food industry, Mr. Boyd and his colleagues analyzed shareholder data from the Icarus database, which contains information from Securities and Exchange Commission filings and reports from news agencies.

The $1.9 billion worth of stock in the five leading fast food companies represented 2.2 percent of the total market capitalization of those companies on 11 June 2009, Medpage Today reported.

The company with the most investment, was McDonald's with $1.2 billion, followed by Yum! Brands with $404.2 million, Burger King with $165.5 million, Jack in the Box with $120 million, and Wendy's/Arby's with $15 million.

The researchers found that the insurer investing the most in fast food, at a total of $422.2 million, was Northwestern Mutual, which offers life, disability, and long-term care insurance.

Next highest at $406.1 million was ING, a Dutch investment company selling life and disability insurance.

Massachusetts Mutual, which offers life, disability, and long-term care insurance, and Prudential Financial, which sells life insurance and long-term disability coverage, ranked third and fourth at $366.5 million and $355.5 million, respectively.

"They're hedging their bets," Mr. Boyd said. "First of all, they're making money by directly investing in fast food, and, secondly, they're making money by often charging higher premiums to people who've eaten a little too much fast food and are obese, have diabetes, cardiovascular disease, high blood pressure, etc."

He said that he would like to see insurance companies sell their stakes in the fast food companies.

"But if they don't divest, at a minimum they could use their position as owners of fast food to insist on higher quality products, lower calories, [and] better information about how many calories are in different foods," he said.

Corporate giants conspiring

Life and health insurance companies aren't the only ones guilty of conspiring though. As well as these unlikely alliances, pharmaceutical companies own major shares in popular vitamin companies, the ones that produce the cheap, allegedly useless chemical vitamin supplements sold at places like Walmart and Walgreens, vegsource.com reported.

Investors in the mainstream media are some of the same companies that own medical imaging equipment manufacturers that produce mammography machines and CT scans, too. And the American Dental Association (ADA) owns patents on materials used in mercury fillings, which could be one of the reasons why the ADA allegedly continues to push for installing toxic mercury into the mouths of children.

Jodie Humphries

Jodie Humphries graduated from Bath Spa University with a BA Hons in Creative Writing in 2008. She has worked for GDS Publishing for the digital group since July 2009. She has previous experience with writing for the web, running her own website since April 2007.

Related News:

Momentous moment for President Obama |Charging employees for unhealthy health habits. |Healthcare insurance - American Medical Association |How bad is the American healthcare system?

Like this article? Get the RSS feed: