By Patience Saghana
Board of directors and shareholders of insurance companies have declined to allow chief executives of the companies to assume full executive powers to run the companies as they have clearly designated them as Managing Directors and not chief executive officers.

Vanguard findings revealed that insurance companies’ directors and owners are unfairly treating their managing directors who like toy boys do their bidding if the heads of management must retain their positions and employment.

This is contrary to the insurance industry’s Code of Good Corporate Governance. Section three of the code clearly states that the Nigerian Insurance Industry shall operate on a good corporate governance framework, which promotes transparent and efficient markets, and clearly articulates the division of responsibilities among different stakeholders in the industry.

The separation of MD from CEO is opposed to the National Insurance Commission’s (NAICOM)’s effort to abolish overbearing influence of board of directors and the holding of the positions of chairman and chief executive by an individual in the insurance industry.

The presence of an effective corporate governance system helps to provide a degree of confidence that is necessary for the proper functioning of a market economy and economic growth. Its adoption is thus inevitable in the Nigerian insurance industry considering the critical role of the sector to financial market stability, investment and economic growth.

NAICOM said the action is in line with international best practices and the need to observe good corporate governance in the insurance industry. Besides, the commission 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 NAICOM boss, the commission will enforce with vigour the provisions of this code in relation to the insurance industry, particularly 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.

Owners of insurance companies do not differentiate between CEO and MD but board of directors of insurance companies and their owners do clearly and specifically set apart the duties of a CEO from that of an MD.

Insurance companies’ managing directors who fall into this category are only responsible for the day-to-day business of a company, that is its operations whilst they are stripped of the Chief Executive Officer that takes firm and key decisions in consultation with the board.

The MD, ordinarily, is a member of the Board of Directors, and is also head of the management of an insurance company but oftentimes, not empowered to take critical decisions concerning the company such as posting, transfer and in most cases, cannot employ or sack by their own judgement. Only few insurance truly entrust the two titles to head of management without reservations.

Vanguard findings revealed that some overbearing board of directors and owners do only allow their companies’ managing directors a meager limit of N500,000 and at most N1 million.

Vanguard further findings revealed that few MDs with courage and guts that have tried to take their stands have had to swim in troubled waters with the board and in most cases with the owners of the companies.