The National Insurance Commission, NAICOM worried about pace of insurance growth in Nigeria, has called insurance industry managers to entrench in their decision-making environmental, social and governance issues relating to the conduct of insurance business.
This the regulator said would be guided by Risk Management and Underwriting Product and Service Development Claims Management, Sales and Marketing.
Commissioner for insurance Sunday Thomas, stated this at the 2022 Insurance Directors Conference in Lagos, on Friday.
Thomas, challenged them regulator, to work in concert 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.
He also noted the imperativeness of collaborating 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.
Thomas, speaking on the theme for the Conference “Transforming the Insurance Industry Through ESG Principles: Directors’ Roles” observed that 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 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”.
He stressed the need for the industry to 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 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.”
Speaking further he said that 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.
The Commissioner defined Corporate Sustainability refers as 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 continued, “In this instance, 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 we are aware of what governance is; the internal governance of the insurance institutions. 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”
He therefore charged the managers to dutifully demonstrate accountability and transparency by regularly disclosing publicly their progress in implementing these principles to relevant institutions responsible for Monitoring and Evaluation of Compliance, Carrying out survey and research among stakeholders
(NAICOM, SEC, FRC).