The National Insurance Commission (NAICOM) has charged board of directors of insurance companies to guarantee their firms are financially sound by directing the management to ensure the efficient use of human and capital resources for the benefits of stakeholders.
This is even as the commission urged the directors to give prompt claims settlement a high priority in their various policy formulations, noting that their companies were in the business of insurance primarily to settle genuine claims made by policyholders.
The Commissioner of Insurance, Sunday Thomas, who gave this charge at an insurance directors’ conference organised by the College of Insurance and Financial Management (CIFM) in collaboration with NAICOM recently in Lagos, said the basic role of the board either in a private or public entity remains the oversight of management to ensure the corporate goals, vision, mission and values of the entity are always scrupulously upheld.
Sunday explained that the theme of the event; ‘Corporate Governance: The panacea for sustainable growth and development of insurance business in Nigeria” was purposefully chosen to serve as a wakeup call for board directors because the position of the board of directors is key in achieving a high level of efficiency in an institution corporate governance structure.
He added that the low level of effectiveness of corporate governance oversights in the insurance sector remains one of the major regulatory concern to the commission and the failure of corporate governance in the year’s past, have played a prominent role in the death or distress of most corporate organizations in the world, Nigeria inclusive.
“Over the years, the commission has made attempts at entrenching good corporate governance culture in the insurance sector. The development and issuance of Corporate Governance Code in 2009 and the Market conduct guidelines in 2014 are among efforts of the commission in this direction.
“Let me state here for emphasis that the primary role of the board either in a private or public entity remains the oversight of management to ensure the corporate goals, vision, mission and values of the entity are strictly upheld at all time.
“The board is also expected to ensure the financial soundness and general wellbeing of the organisation by monitoring the management, to guarantee effective and efficient deployment of human and capital resources in the overall benefit of all stakeholders.
“It is imperative for me to remind us here that your companies are in the business of insurance primarily to settle genuine claims made by policyholders. In all policy formulations of the board I am appealing that the prompt settlement of claims be given a high priority.”
“The observance of this role has been lacking in some of our companies and which has contributed in no small measure to the challenges facing these companies today,” he stated.
Nigeria’s insurance contribution to the nation’s GDP at less than 1 percent has under performed its potential, especially when compared with other sectors in the financial services industry, he said.
“I believe that once we can successfully navigate this corner, we could be on our way to entrenching a financially solid, vibrant, viable and active insurance market that would bring about not only an increase in penetration but a substantial increase in the industry’s contribution to GDP. This will also simulate accumulation of long term funds for infrastructural financing, job creation, and an improved Return on Investment”, he concluded.