As at last March, over 200 non-executive directors who breached the code were said to have been booted out in the wake of the enforcement of the code by the National Insurance Commission (NAICOM).
The Nation learnt that over 70 per cent of the directors of insurance firms who fail to comply with the regulator’s April 30 directive to quit after nine years on the board risk being forced out in the exercise, which experts say promises a new dawn for the risk-bearing industry.
To enthrone a regime of corporate discipline and sanity in the insurance industry, the industry regulator, NAICOM commenced the enforcement of the Code of Corporate Governance as stipulated in Section 5.04 (vii) of the 2009 Corporate Governance Code of the Commission.
NAICOM read the riot act to operators at the ‘2nd Insurers Committee meeting’ in February this year, issuing a directive to 59 existing insurance companies that all non-executive directors who have served up to nine years on their board should quit, effective April 30, 2016.
Before the directive, many non-executive directors on the board of insurance companies, including some chief executives were said to have held the positions for about two decades, despite being public quoted companies and in contravention to the code of good corporate governance.
It was learnt that though the level of compliance with the code by directors of insurance firms grew, following the second Insurers Committee Meeting where the Commissioner for Insurance, Mohammed Kari, informed the chief executives of NAICOM’s intention to come down hard on defaulters, many of them still got on the wrong side of the law.
NAICOM’s sledge hammer has since fallen on former Head of State, General Yakubu Gowon, who, until the Commission’s enforcement of the code, was Chairman of Industrial and General Insurance (IGI) for 24 years.
The Commission’s decision to go full swing in the enforcement of the code also swept away other non-executive directors of the company, including the founding director-general, Nigerian Stock Exchange (NSE), Apostle Hayford Alile and Mrs. Olubunmi Olowude, wife of the late Executive Vice Chairman of IGI, Mr. Remi Olowude.
They have all relinquished their positions in the company in compliance with the Code of Corporate Governance directive.
In his speech at the company’s last year’s Annual General Meeting (AGM), Gowon said their retirement came on the heels of NAICOM’s directive requiring non-executive directors who have served up to nine years on the board of insurance companies to go. He said with the new composition of its board, IGI became one of the first underwriters to fully comply with NAICOM’s directive.
The enforcement of the code also forced out the Chairman of Guinea Insurance Plc, Sir Emeka Offor and four directors of the company, namely, Fred Udechukwu, Eze Smart Nze, Prof. E. L. C. Nnabuife and Mr. Emeka Agusiobo.
Consolidated Hallmark Insurance Plc was not spared either. Six of its non-executive directors exited the board. The Chairman, Ugo Ralph Ekezie, at the company’s 21st AGM announced that changes had occurred in the composition of the board as six non-executive directors have retired.
His words: “These changes are in full compliance with various regulatory provisions, particularly the 2009 NAICOM code of good corporate governance. To immediately fill the vacuum created by the retirement of six non-executive directors, including me, the following highly experienced professionals from diverse disciplines have been appointed, and are to join the board.
“They are Obinna Ekezie Obidegwu, Chief Andrew Odigwe, Mr. Joel B. Avhurvi, Mrs. Adebola Odukale and Prine Onuorah. A new Company-Secretary/Legal Adviser, Mrs. Rukewe Falana has also been appointed to replace Messrs Foundation Chambers. The company has appointed an Executive Director, Finance Systems and Investment with effect from April 1, 2016. He is Mr. Babatunde Daramola.”
On the company’s future outlook, Ekezie said the directors had passed on the baton to a new team of capable hands who would take the company to greater heights. “Our desire is to continue to provide the necessary support to the new members of the board to enable them succeed,” he said.
Also, the Chairman of NEM Insurance Plc, Chief Adewale Teluwo and other non-executive directors, including Sesan Adekunle, Mrs. Olayinka Titilope Aletor and Fidelis Ayebae exited from the board of the company.
Also, pioneer Chairman of Sovereign Trust Insurance Plc, Ephraim F. Faloughi, and other directors retired on April 7, this year, after two decades of meritorious service to the organisation.
Managing Director, STI, Olaotan Soyinka in a statement, said the underwriting firm would be unveiling the new Chairman of the Board of Directors and other directors of the newly constituted Board.
However, some firms complied before the deadline for the enforcement of the code by NAICOM. They are Niger Insurance Plc and Standard Alliance Plc, among others. Some companies like Mutual Benefits Plc, LASACO Assurance, Staco Insurance Plc and many more are however, about to implement the directive.
NAICOM explains position
The Commission said it introduced the enhanced corporate governance and guidelines in 2009 when it issued the Code of Good Corporate Governance in the industry. It said it regularly reviews its policy guidelines to operators in line with changing business environment.
Kari said corporate governance is, particularly, important in the sector to ensure that some financial failures, frauds and questionable business practices do not affect investor confidence, while also ensuring global competitiveness. The country is in the era of change and the insurance sector cannot be left behind, he said. “Under the present dispensation and a rapidly dynamic environment, the industry certainly cannot continue to apply the same methods and approach of conducting its business and expect a different result,” Kari added.
He, however, said the Commission was not unmindful of the challenges in the industry, which required the efforts of stakeholders to navigate to safety.
For NAICOM Director of Inspectorate, Barineka Thompson, the face of regulation in the industry is changing. He said with the changing face, insurers are required to have a robust risk management culture and practice, an effective internal control mechanism, good governance system and transparent reporting systems and disclosures.
“They are also required to have an efficient IT and processes platforms for improved operational efficiency and low cost operations.
‘’NAICOM will adopt appropriate supervisory tools to be much more willing to intervene in management/board governance matters and use predictive analysis tools to monitor forward solvency positions,” he added.
Thompson further pointed out that the transformation agenda is offering the industry the opportunity to readjust its governance, operational structures and leverage on the interest and support provided in the policy direction of the Commission.
“It is expected that companies will begin to review their strategic business and operating models, overhaul product portfolios and distribution strategy, enhance ICT capability and other elements that can stimulate the growth of their overall business,” he said.
Thompson also noted that NAICOM will remain focused on the issues relevant to the protection of policy holders, growth of the insurance sector and promote financial stability.
He said insurers must keep pace with evolving regulations, which are becoming more stringent, affecting everything from capital requirements, to commission rates and customer care.
Immediate past President, Nigeria Insurers Association (NIA), Mr. Gus Wiggle, said that with the full implementation of the corporate governance code, there would be improved enforcement of the ‘No premium No cover’ policy.
He also said there would be better adherence to the prudential guidelines, full compliance with the International Financial Reporting Standard (IFRS) and improved anti-money laundering mechanisms coupled with the administrative acumen and ingenuity of insurance chief executives.
Wiggle expressed optimism that with the enforcement of the code, the insurance industry will continue to be the preferred investment destination from renowned players in the world insurance market.
He said on its part, the association would continue to support NAICOM in its desire to build a strong and virile market that would be a point of positive reference in the African insurance space.
The Managing Director, Niger Insurance Plc, could not agree less with Wiggle. While describing the exercise as “a welcome development,” he said it will put the industry at par with the global insurance market.
For Consolidated Hallmark Insurance Plc Managing Director,, Eddie Efekoha, the new dawn that is gradually coming the way of insurance business in the country, following the implementation of the code was fallout of the change of guard at the top echelon of the industry regulator last year.
He said since the coming on board of Kari as new Commissioner for Insurance, he has moved swiftly to continue with the reforms started by his predecessor.”The implementation of the 2009 code of good corporate governance led to the retirement of the six directors of our company, he said.
Efekoha added: “This development cut across the country as over 200 non-executive directors retired in March, 2016.”
In Nigeria, corporate governance became an issue of public discourse after the collapse in the banking sector in the early 2000s. Consequently, industry regulators evolved corporate governance codes to prevent another round of corporate failure.
According to experts, corporate governance is of great importance for public limited liability companies because they raise capital from the stock market and individual and institutional investors hold vast portfolios of shares and other investments in public companies.