Insurers Urged To Entrench ESG Issues In Conduct of Insurance Business
Mr Olorundare Sunday Thomas, CEO, NAICOM
The Directors of insurance companies have been urged to ensure the entrenchment of Environmental, Social, and Governance (ESG) issues in their decision-making in relation to the way insurance business are being conducted especially in the areas of strategy, risk management, and underwriting, product and service development, claims management, sales, and marketing.
They were also enjoined to work with other stakeholders to raise awareness on environmental, social, and governance issues, manage risk and develop solutions in the conduct of the insurance business in Nigeria.
In his opening remarks at the 2022 insurance directors’ conference held in Lagos recently themed “Transforming the Insurance Industry Through ESG Principles: Directors’ Roles,” the Commissioner for Insurance/Chief Executive Officer, National Insurance Commission of Nigeria (NAICOM), Mr. Olorundare Sunday Thomas, emphasized the need for Directors of insurance companies to entrench ESG principles in their business strategies and operations.
While calling on the Directors to work 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, Thomas also charged them to demonstrate accountability and transparency in 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 like NAICOM, Securities & Exchange Commission (SEC), and Financial Reporting Council (FRC).
“In the same vein, NAICOM also expects that you will take interest in pursuing developments of green products; improving operations geared towards energy efficiency; investment strategies; leveraging technologies; insuring people with disability; corporate social responsibilities (CSR) and improving and complying with professional standards,” NAICOM boss said.
He said NAICOM on its part has already evolved certain initiatives in the area of sustainability including climate Change that will take care of flood and disaster management; monitoring population growth – annuities insurance longevity; green technology- work on electronic submission of regulatory returns and Renewal of Licenses etc.
Other areas according to him include investment and strategy support to ethical investment; green products- Takaful & Microinsurance; implementation of policies to encourage insuring crops and weather base index; treating customers fairly through prompt claims payment amongst others and synergy with development partners such as FSD Africa on BimaLab Project.
Thomas said “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.
“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.”
While advising the Directors to be deliberate about ESG issues, Thomas said “let me advise 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, 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.”
