The National Insurance Commission has called on insurance companies to reduce their environmental footprint through internal operations and business activities.
The Commissioner for Insurance, Sunday Thomas, made the call in Lagos at the 2022 Insurance Directors’ Conference organised by the College of Insurance and Financial Management (CIFM) in partnership NAICOM.
He said owners of companies must take deliberate steps at reconciling long-term with short-term goals, global expansion with local objectives, workplace and community issues while not losing sight of the basic goals of profitable operations and increasing shareholder value.
Mr. Thomas 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.
He noted that the Conference with the theme “Transforming the Insurance Industry Through ESG Principles: Directors’ Roles” was apt in the face of enormous challenges bedeviling the sector.
“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.
“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,” he said.
The NAICOM boss also urged the participants to take cognizance of the fact that Industrialization 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 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,” he said.
He however, urged the participants to draw on external knowledge and partnerships in order to keep pace with wider trends affecting not just the local but the global insurance market adding that the operators 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.
Chairman, Governing Board
National Insurance Commission, Dr. Abubakar Sani, said in response to the urgent need to strengthen good corporate governance in the insurance Industry, the Commission recently issued a landmark circular imposing limit of tenure of Chief Executives of Insurance and Reinsurance Companies.
He said though, it could be admitted that the Banking Sector was ahead of insurance in that regard, it was better late than never.
“This limit of tenure 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.
He said as Policy Makers of their various Companies, it was imperative that they begin to accord priority attention to the adoption of ESG principles.
“Hopefully, this will make for an insurance market with strong positive image that can proudly stand out as a force in the Nigerian Financial and Economic ecosystems.
“On our part in the Commission, we will continue to push for reforms that will enable seamless implementation ofESG principles in the insurance sector,” he concluded.