By Nike Popoola

Monday, 18 Oct 2010

The need to set clear standards and provide appropriate guidelines for the insurance players on important issues of governance has been cited by the National Insurance Commission as the major reason for the National Insurance Commission’s code of good corporate governance in the sector.

The Commissioner for Insurance, Mr. Fola Daniel, disclosed this during the maiden edition of the Insurance Directors‘Seminar on Corporate Governance, which NAICOM organised in collaboration with Excel Professional Services Limited, in Lagos.

Daniel said, ”The code provides an important regulatory context for the design of the structures of the corporation and for the observance of best practices in its operations.”

According to him, the code of conduct also deals with the interaction between the different sectors and the way the corporation utilises the resources at its disposal in the discharge of its mandate.

Daniel said that the code was introduced in 2009 and that the commission needed to do more to assist the operators in implementing its provisions.

According to him, to promote the implementation of the code, which is mandatory, there is an urgent need to enlighten insurance directors on the basics of corporate governance.

A crucial part of this enlightenment programme, he said, was to demonstrate to the operators the practice of good business, which had been widely accepted in the world.

The commissioner identified another imperative in promoting the implementation of the code. According to him, it is to foster a culture of continuous education among directors of insurance firms.

He said, ”When such a culture takes root, insurance directors will be better equipped to handle the onerous responsibilities they shoulder in the growth and profitability of their institutions as well as in the development of the insurance industry in Nigeria.

”It will institute a process of reporting on the progress individual firms in the industry are making in implementing the code and to offer assistance that will permit a general rise in governance standards and the orderly growth of the industry.”

The commissioner said that NAICOM had some objectives which included to draw attention to the importance of good corporate governance for business, economic development and environmental sustainability, to highlight best practices in corporate governance and to show how these could be adopted in individual firms.

He added that it aimed to examine the responsibilities of the board of directors and the relationship that should exist between the major actors for the board to effectively discharge its responsibilities.

Daniel said that the commission also planned to examine the duties and liabilities of directors under the law and initiate a culture of continuous education among insurance directors.

The Chairman, Board of Directors, NAICOM, Hajiya Maryam Ciroma, noted that the global economic crisis had drawn attention to existing structures for regulating and supervising financial institutions all over the world.

She said that this had raised questions on the adequacy of existing structures and institutions and what else government needed to do to strengthen them in order to ensure growth and development of the financial market.

She said, ”One realisation, which emerged out of these enquiries is that formal regulations alone, no matter how detailed, could not achieve the kind of robust financial systems the world desires. What is important is to compliment formal regulations with self regulations.”

Source: Punch