A new regulation being prepared by the National Insurance Commission may lead to the exit of at least 60 chief executive officers of insurance companies and brokerage firms, who have stayed in the position for 10 years.
If as anticipated the draft regulation becomes law after April 31, 2017, the CEOs who fail to put in place succession plans to hand over to new leaders will be relieved of their duties, investigation has revealed.
The draft corporate governance guideline for insurance institutions was sent to stakeholders in the sector last week by NAICOM for their inputs, but our correspondent gathered that the regulator was not under any obligation to consider the misgivings of the stakeholders and tinker with the guideline.
The Commissioner for Insurance, Mr. Fola Daniel, said the corporate governance guideline was still an exposure draft that had not yet become a law.
“It is an exposure draft and the industry has up till next week to make comments; after making their inputs, we will look at the ones that we will accept and those we will discard,” he said.
The draft regulation, a copy of which was exclusively obtained by our correspondent, pegged the tenure of the chief executive officers of insurance underwriting and brokerage firms at a maximum of 10 years.
It, however, gave a transition period of up till April 31, 2017 to enable the affected CEOs to put succession plans in place so as to ensure smooth transition to other qualified professionals.
Our correspondent learnt that some of the concerned chief executive officers held an emergency meeting in Lagos on Friday to initiate a dialogue with the commission to reverse the decision.
The guideline states that the tenure of the chief executive officers and executive directors shall not exceed maximum of two terms of five years each.
It adds that no individual member of the board shall retain the position of chairman for a period more than 12 years in line with the maximum terms of appointment of three terms of four years each.
The President, Nigerian Council of Registered Insurance Brokers, Mr. Ayodapo Shoderu, who confirmed that the stakeholders had just received a draft copy of the corporate governance guidelines for insurance institutions, described the development as painful.
“The most painful thing about it is saying that any director that has operated an insurance brokerage firm for 10 years has to resign and allow someone else to become the chairman or chief executive officer,” he said.
According to him, insurance brokerage all over the world is a personalised profession that people practise till death.
“You cannot ask somebody who singlehandedly started his company and who is just keeping his head above water to resign and handover to somebody else who has not had enough experience because he has spent 10 years as the CEO,” he said.
The Director-General, Nigerian Insurers Association, Mr. Sunday Thomas, said the issue of succession plan would be brought to the front burner by the new guideline.
“The concern is that the industry is not prepared for it but I think the industry appreciates it and the market is coming up with its own comments and suggestions, which will assist the regulator in implementing the guideline,” he said.
Thomas said most times when professionals retired as underwriters, they usually become brokers.
“If he sets up a brokerage firm and has to leave it after a while when the company has not developed to a point where it will no longer require his superintending, that may be an issue,” he said.
The Director-General, Chartered Insurance Institute of Nigeria, Mr. Kola Ahmed, said most of the underwriting firms had executive directors and deputy general managers who were qualified professionals who had been in the industry for a long time and could head the companies.
“It is a good development; I think NAICOM is trying to prevent a sit-tight syndrome just as we had in the banks when some chief executive officers were there for more than 15 years before the Central Bank of Nigeria introduced a similar measure,” he said.
According to him, change in leadership of the companies will help to introduce dynamism and innovation to the industry.