The Commissioner For Insurance, Mr. Olorundare Sunday Thomas’s opening address at the 2022 Insurance Directors’ Conference said this year’s Insurance Directors’ Conference organised by the College of Insurance and Financial Management (CIFM) in partnership with the National Insurance Commission, NAICOM.
Thomas said the role of board of directors in the survival and transformation of their establishments can never be over emphasized thus, this Annual programme is meant to apprise the directors with the developments in the industry and also equip them with necessary knowledge that will enhance the value of their companies
The 2022 Insurance Directors’ Conference held on Friday, December 9, 2022 at Radisson Blu, Ikeja, Lagos
“I want to appreciate the Rector of the College Dr. Yeside Oyetayo and members of her team for their commitment and drive at ensuring that this Conference is convened annually notwithstanding the enormous challenges, he added.
“The theme for this year’s Conference “Transforming the Insurance Industry Through ESG Principles: Directors’ Roles” is specially couched in view of the fact that the world is going through rapid changes economically, socially, and environmentally and, the need to bring Directors of insurance entities to speed on these developments to enable sustainability.
He further noted that we must take cognizance of the fact that Industrialization and economic development have given rise to a wide spectrum of environmental externalities and social impacts bringing to the fore issues such as board structure, shareholder rights, business ethics, risk management, incentives and executive compensation.
Consequently, Thomas said 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.
In his words: 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.
NAICOM Boss In the financial services industry, there is an increasing realization 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.
While not trying to pre-empt the presentations of the experts, he said let me attempt a definition of corporate sustainability and ESG if only for us to appreciate the enormous task ahead of us as board members.
“Corporate Sustainability refers to an overall approach to managing organizations that prioritize environmental and social value creation alongside the traditional goals of profitability and growth. And ESG (Environment, Social, and Governance) are the three broad categories within which corporate sustainability is measured, he stated.
In this instance, he stressed environment will refer to the impact an insurance institution’s operations have on the environment and the steps taken to reduce it while social is how insurance institutions manage their relationships with the people who work for and with them, as well as the local communities within which your companies operate. Of course, he pointed out that we are aware of what governance is; the internal governance of the insurance institutions, added that its compliance with regulations, internal controls and checks, decision-making processes, and protection of stakeholder rights.
“It is pertinent to point out here that sustainability reporting is becoming more and more prevalent and sought for not just by governments through regulations, but also by stakeholders such as investors, consumers, and employees. Increasingly, companies all over the globe are incorporating sustainability in long-term development strategies as well as their day to day operations
As your regulator, Thomas noted it’s our responsibility to draw your attention to this development and to continuously encourage you to comply with the following principles in the best interest of your companies and the larger insurance sector:
1. Entrenching in your decision-making environmental, social and governance issues relating to the conduct of insurance business.
b. Risk Management and Underwriting
c. Product and Service Development
d. Claims Management
e. Sales and Marketing
2. Working with other stakeholders to raise awareness on environmental, social and governance issues, manage risk and develop solutions in the conduct of insurance business in Nigeria.
3. Working together with government at all levels, regulators and other key stakeholders to promote widespread action across society on environmental, social and governance issues in the insurance sector.
4. Demonstrate accountability and transparency in regularly disclosing publicly your progress in implementing these principles to relevant institutions responsible for Monitoring and Evaluation of Compliance and Carrying out survey and research among stakeholders (NAICOM, SEC, FRC)
In the same vein, Thomas said NAICOM also expects that you will take interest in pursuing:
1. Developments of Green Products.
2. Improving operations geared towards energy efficiency.
3. Investment Strategies
4. Leveraging Technologies
5. Insuring people with disability
6. Corporate Social Responsibilities (CSR)
7. Improving & Complying with Professional Standards
“On our part, the Commission has already evolved certain initiatives in the area of sustainability.
1. Climate Change: Flood and Disaster Management
2. Monitoring Population Growth- Annuities Insurance Longevity.
3. Green Technology- Work on Electronic Submission of regulatory returns and Renewal of Licenses etc.
4. Investment and Strategy Support to Ethical Investment.
- Green Products- Takaful & Microinsurance.
6. Implementation of Policies to encourage Insuring Crops and Weather Base Index.
7. Treating Customers fairly- Prompt Claims payment amongst others.
8. Synergy with development partners i.e FSD Africa on BimaLab Project.
The commissioner said insurance industry globally is continuously undergoing profound changes; we must admit that the disruption we are faced with is not just digital but also harsh market conditions, demanding customers, innovative new market entrants and regulations which are also some of the forces transforming the insurance industry.
However, he said wherever there is a challenge, there is an opportunity. And all the sources of disruptions can be harnessed to become a source of growth for insurers. While no one can predict exactly what insurance might look like in a decade, insurers can take several steps now to prepare for these changes, he said.
“Each of the four Principles for Sustainable Insurance has actions in the areas of company strategy, risk management and underwriting, product and service development, claims management, sales and marketing, investment management, clients and suppliers, insurers, reinsurers and intermediaries, government regulators, policymakers and stakeholders.
“It is imperative that as an industry, we take precautionary measures by raising awareness within ourselves on the potential sustainability impacts of business transactions, and integrating these considerations into pre-emptive and holistic risk management processes.
He disclosed that We want to further encourage insurance companies to reduce their environmental footprint through their internal operations and business activities. I want to borrow the words of my dear sister, Dr. Yeside Oyetayo, Rector of the College of Insurance and Financial Management when she said and I quote “Insurance is the industry that ensures the survival of other industries, it has always risen to the risks associated with human challenges in the past, and climate risks require that insurers must be part of the solution”
As I conclude my opening remarks, he continued, let me advice that as leaders of your respective companies, it is instructive that you take deliberate steps at reconciling long-term with short-term goals, global expansion with local objectives, workplace and community issues; all of which must be united, while not losing sight of the basic goals of profitable operations and increasing shareholder value. Consequently, he added that in order to facilitate economic prosperity, ensure environmental sustainability and social development, we must join forces with identified stakeholders to drive long term sustainable growth in the insurance sector for lasting benefits to all stakeholders.
“As an industry, we should draw on external knowledge and partnerships to keep pace with wider trends affecting not just the local but also the global insurance market. According to the commissioner, we must discover strategies to adapt and overcome further changes in the near future that may arise as a result of entrenching Economic, Social and Governance principles adding that
creating an enabling and sustainable environment through value creation.