By Favour Nnabugwu
National insurance Commission, Naicom has direct insurance companies to unite long-term goal with short- term objectives without misplacing their focus of profitable operations.
Commissioner for Insurance, Mr Sunday Thomas at the Directors conference on the theme: Transforming the Insurance
Industry Through ESG Principles: Directors’ Roles held at the College of Insurance and Financial Management, Ogun State.
Thomas said while increasing their shareholders value, companies should reconcile global expansion with local objectives and workplace with the community.
According to him, “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 , 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. 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”
The CFI said the 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
“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, 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
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 CFI said the major objective of balancing the spheres work well for the companies, “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
Thomas stated that 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.
“The 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.”
He urged insurance companies to take steps that will prepare them for the future, however, 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”
“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”.
We want to further encourage insurance companies to reduce their
environmental footprint through their internal operations and business
Speaking earlier, the Chairman, Governing Board of Naicom, Dr Abubakar Sani said the limiting of tenure for Chief Executive Office in the insurance industry is to ensure younger crops coming into the sector.
Sani said the limit of tenure will engender crops of younger professional and also help the industry to have a succession plan.