By  Patience SAGHANA
The National Insurance Commission may soon beam its searchlight on the group corporate structure of insurance companies in the country.

Vanguard reliably gathered that the commission has not approved the designation of Group Managing Director for a good number of chief executive officers parading themselves as such in the industry, having only been recognized as simply Managing Directors. This implies that insurance companies which have adopted the group structure are doing so without due approval from the regulatory body.

One of the peculiarities of organisational structure within the insurance industry is the presence of a large number of separate insurance companies within a single overarching parent organization such as the Life, Non_Life and other subsidiaries of the organizations which are spread to capital, property etc.

Those groups as they are known within the industry appear to offer less protection against insolvency risk of a single multi_line insurance company, since some of them have a smaller pool of equity capital in each of the subsidiaries than a combined enterprise. Besides, the fact that a group structure is expected to involve higher legal and administrative costs; it is most of the group to explain the continued existence of the fleet form of organisation.

To avert and if possible avoid the inherent implications of the group structure, NAICOM in its Code of Corporate Governance for the insurance industry abolished office of the executive chairman and chief executive by an individual in the insurance industry.

Consequently, the combination of the two positions by any individual attracts stiff sanctions from the regulatory body, stating that a offices by one man is inimical to international best practices and good corporate governance.

Hence, insurance companies that currently have executive chairmen or executive vice chairmen position would have to review their structure in accordance with the new guideline.

Besides, the commission also directed that no two members of the same family either nuclear or extended will be allowed to occupy the positions of chairman, MD/CEO and executive director of the company at the same time.

Mr Fola Daniel, commissioner for insurance said that the two positions shall be separate and it is no longer permissible for one person to combine the two positions in any company at the same time.

According to him, “The commission will enforce with strength the provisions of the code especially as it concerns separation of power and conflict of interest.

On conflict of interest, he noted that the code requires companies to adopt a policy to guide the board and individual directors on conflict of interest situations, stating that the commission will frown at directors of companies operating in circumstances of conflict of interest.

NAICOM elucidated that the separation of ownership from control of business made the rendering of stewardship a critical highpoint of corporate governance.

Thus, one critical issue for corporate governance is how to strengthen the accountability of boards of directors to shareholders.