Plans by the National Insurance Commission (NAICOM) to enforce the 2009 NAICOM Code of Corporate Governance on Chief Executive Officers (CEOs) of insurance companies have not changed, The Nation has learnt.
The regulatory body, NAICOM, in 2009, launched Code of Corporate Governance for the insurance industry in Nigeria as part of its strategic efforts to rebuild and sustain the waning confidence of stakeholders in the sector.
In the first quarter of 2016, NAICOM began the enforcement of the code on chairmen and board of directors of insurance companies who have held sway as board members of their companies for over 10 years, leading to a major change in boards as at the end of the year.
The commission which said it was enforcing the code one at a time to ensure effective and efficient compliance, promised to also enforce the code on CEOs.
NAICOM Head, Corporate Affairs Department, Rasaaq Salami in an interview with The Nation, said the commission will go on with its plan to enforce the code on CEOs at the appropriate time.
He, however, said that the commission is also waiting on the Financial Reporting Council (FRC)’s new code on chief executives to adopt it for enforcement on the executives.
He stated that the industry’s 2009 Code did not include that of the CEOs and ‘’that is why we want to wait for the FRC code which supersedes regulatory codes for the private sector’’.
The Chairman Sub-Committee Publicity and Communications of the Insurers Committee, Oye-Hassan Odukale, who is also the Managing Director Leadway Assurance Limited, said operators are given up to the end of March to comply with the 2009 code.
He said NAICOM has agreed that since the FRC is coming up with a new code, the industry will allow the FRC code when it is out to supersede the present code in the industry.
Commissioner for Insurance, Mohammed Kari while speaking to operators at the Chartered Insurance Institute of Nigeria, said the commission has found Executive recklessness and or timidity at the very top of the executive ladder in some companies.
Kari disclosed that they also found executives that have feigned ignorance when asked to give account of their companies’ misconducts.
He said: “While some have blamed the Chairman or Directors, some have simply claimed unawareness. Directors including executives seem oblivious of the fact that their action can lead to criminal prosecution. It is true that there had been Chairmen that were overbearing, but any professional on the seat of a company’s executives, should know the expectations on him are onerous.
“The insurance professional’s role in Board oversight responsibilities is to bring in his professional competence and ethical orientation into play in Board deliberations. In this regard, he is expected to provide explanations and clarifications on issues when necessary in the course of the Board’s work. This is more so on technical insurance issues. He is also expected to bring the professional orientation of integrity and objectivity in his contribution in Board’s decision making. The insurance professional should use his membership of the Board to raise the quality of discussion in Board meetings and, over time, assist other directors in developing improved perspective on insurance and ethical issues.
“As a member of executive management, he should ensure the information contained in Board papers are accurate and complete in terms of what the Board should know about the insurance entity and reasonableness of explanations offered for any matter being presented to the Board for special attention or deliberation. We find the reverse situation where in absolving themselves, the Directors blame management for corporate misconduct. It is not uncommon to hear some Directors complain that the information or explanations given to them by NAICOM during intervention-related meetings were never given to them by management.”
He said be as it may, the blame starts from shareholders who do not get involved in the selection of their Directors or who have little concern about their professional competence, compounded by the Board of Directors whose basis of selecting the company’s Executive is their blood or village relations or potential loyalty the Executive would confer on the Chairman.
“It is of joy to hear that the Industry is making concerted efforts on their own to address these deficiencies. The Commission has welcomed these determinations and I can confirm that arrangements have gone far in the organisation of mandatory Directors training to supplement the efforts.
“The code of good Corporate Governance plays an important role in the success of any institution. We have observed a correlation between technically and financially deficient companies with corporate governance problems. We see this as negligence on the part of the Board either in performing its oversight functions and or the Board itself actively involved in unprofessional practices”.
He pointed out that the effective performance of the code and market conduct practice are for the benefit of all and it makes the management of the professional resource easier for the company and it also ensures stability in the market. Regulators despise instability, however stability does not necessarily mean maintaining status quo.