NAICOM charges operators on sustainable growth
The National Insurance Commission (NAICOM) has advised underwriting firms in the country to minimise their environmental footprint through internal operations and business activities to address future challenges in the industry.
The advice was given by the Commissioner for Insurance, Sunday Thomas, at the 2022 Insurance Directors’ Conference organised by the College of Insurance and Financial Management (CIFM) in partnership with the commission.
The commissioner called on promoters of insurance companies to take deliberate steps at reconciling long-term with short-term goals, global expansion with local objectives and workplace with community issues without losing sight of the basic goals of profitable operations and increasing shareholder value.
Thomas said each of the four principles of sustainable insurance has a call to action.
He said this year’s theme is specially created because the world is going through rapid changes economically, socially and environmentally, hence the need to bring directors of insurance entities to speed on these developments to enable sustainability.
“The role of the board of directors in the survival and transformation of their establishments can never be over emphasis ed thus, the yearly programme is meant to apprise the directors of the developments in the industry and also equip them with the necessary knowledge that will enhance the value of their companies,” he said.
Thomas urged the participants to take cognisance of the fact that industrialisation and economic development have given rise to a wide spectrum of environmental externalities, as well as social impacts; which bring to the fore issues such as board structure, shareholder rights, business ethics, risk management, incentives, and executive compensation.
“Consequently, for businesses to continually develop, they must take into consideration the community in which they operate, ensure consistent value to customers, maintain the highest standards of governance and ethics, and mitigate its overall impact on the environment.
“Sustainable finance, which is the creation of economic value through the provision of financial services, now integrates Environmental, Social, and Governance (ESG) considerations for the lasting benefit of stakeholders and the society at large.
“The objective is to achieve a balance in the pursuit of economic prosperity with environmental protection and social development.
“In the financial services industry, there is an increasing realisation that sustainable practices have a positive potential to save costs, increase revenues, reduce risks, develop human capital and improve access to finance thus, ignoring sustainability issues increases legal and reputational risk,” he said.
Also, the Chairman, Governing Board of the commission, Dr. Abubakar Sani, said in response to the need to strengthen corporate governance in the insurance industry, the commission has issued a landmark circular imposing a limit on the tenure of the Chief Executives of Insurance and Reinsurance Companies.
Sani said though it could be admitted that the banking sector was ahead of insurance in that regard, it was better late than never.
The limit of tenure, according to him, will engender industry renewal with younger crops of CEOs and faster movement up the corporate ladder, with better career progression in the insurance industry.
“There will also be credible succession planning as this policy initiative of the Commission will immediately begin to address the Insurance Industry challenge of lack of adequate and capable manpower to head Insurance and Reinsurance Companies.
“You will agree with me that all of these will make for a more ideas-driven insurance industry with a sustainable future. I hereby crave the indulgence of this noble gathering to look into this guided future of the Insurance Industry within the framework of ESG principles,” he said.