The need for boards of insurance companies to be digitally savvy and priotise claims payment, among others, have been identified as growth potential in a changing world. Omobola Tolu-Kusimo reports.
Boards with three or more digitally-savvy directors have 17 per cent higher profit margins, 38 per cent higher revenue growth, 34 per cent higher return on assets, and 34 per cent higher market cap growth than those with two or fewer.
Emerging trends in corporate governance include a considerable and renewed focus on sustainability, technology governance, Environmental, Social and Governance (ESG) guidelines, stakeholder management, gender diversity, and the board’s role in digital transformation.
Boards should take advantage of trading opportunities provided by cyclical movements in yields, and stick to short end of the curve in low interest rate regimes.
These were part of issues raised by experts at the 2021 Insurance Directors’ Conference, organised by the College of Insurance and Financial Management (CIFM) and the National Insurance Commission (NAICOM) in Lagos.
The experts advised company boards to consider the issues for growth in this digital age.
The Chief Executive Officer, Future Software Resources Limited, Nkemdilim Uwaje Begho, while delivering a paper entitled: “Insurance Business in Uncertain Time: The Corporate Governance Perspective”, urged insurers to model corporate governance in line with local compliance as required by the regulator as well as in line with the International Corporate Governance Network (ICGN) global governance principles which describe the responsibilities of boards and shareholders respectively and aim to enhance dialogue between the two parties.
She said to survive in uncertain times, insurers should make sure that scenario planning is key; embrace the digital age; react swiftly to policy change and regulatory intervention; take into account multiple stakeholder interests sustain continuous learning at board and organisational level.
She noted that in embracing uncertainty, organisational agility is key, while long term planning is becoming obsolete, adding that strategies need to be tracked and reviewed in real time.
She said: “Insurers need to identify the most salient uncertainties for the industry business and define organisational risk appetite; stress test different scenarios: weigh enterprise risk and opportunity in relation to both the stress of the situation today and the different ways industries and organisational positions might be reshaped in the new normal.
“Boards must support management hence the need for constant communication and higher levels of engagement; focus on data driven and scenario based decision-making and real time tracking and monitoring of economy & industry”, she noted.
The Managing Director, First Ally Asset Management Limited, Olumayowa Ogunwemimo in her presentation on “Maximising Returns in The Nigerian Economy”, said: “Directors should aside from taking advantage of trading opportunities provided by cyclical movements in yields, stick to short end of the curve in low interest rate regimes should invest in USD receipts in USD instruments to hedge against a devaluation risk while they ensure safety over returns.
“They should consider direct investment is selected real estate projects that meet investment objective; maximise use of existing real estate asset or consider disposal; consider commodity backed notes issued by the two commodity exchanges in Nigeria among other investment strategies”, she added.
Earlier, the Commissioner for Insurance, National Insurance Commission (NAICOM), Mr. Sunday Thomas, in his opening address implored insurance directors to prioritise payment of genuine claims and work with their managements to promote prompt settlement of claims.
He stated that issue of claims settlement as and when due is one issue that has been setting the industry on a reverse gear.
“One issue that has been setting the industry on a reverse gear in its developmental efforts is the issue of claims settlement. A few amongst us have been making this work a tedious one by not paying claims promptly. We should know as a fact that insurance business is about payment of genuine claims and anything short of that will continue to hurt insurance business in the country thereby giving the industry poor reputation, perception and image. I urge you to look at this issue at your level and deal with it decisively as it has continued to give the industry a bad name,” he said.
On the issue of development of insurance in the country, he urged the directors to work closely with their management as a lot is expected from them at the top level, stressing that the commission is working to open up the market particularly the retail end, conducting engagements with various agencies and state governments on the need to boost insurance culture across the country.
According to him, the supply side which is the insurance companies must also be proactive with follow-ups in these places, adding that if the industry is desirous of having significant impact on the nation’s GDP, it must take retail business seriously.
“This has to start from the policy level and the directions clearly spelt out. This also must be supported with massive awareness campaign about insurance products across the geo-political zones taking into consideration peculiarity of each of the regions,” he said.
The NAICOM helmsman noted that insurance regulator and practitioners indeed must rise up to manage an industry that helps others to survive, submitting that the insurance industry needs to survive first in order to conveniently shoulder the responsibility of helping other businesses to survive.
He said that the future of insurance is arguably the future of the economy, adding that the directors are all leaders in their own rights and that the success or failure of the sector is in their hands as decision makers.
