Media Release 16 September 2015
INSURERS FACE SHRINKING TALENT POOL FOR NON-EXECUTIVE DIRECTORS
Insurers may soon struggle to recruit non-executive directors as increasingly prescriptive regulation puts pressure on those performing such roles. The International Underwriting Association has warned that rising responsibilities may shrink the ‘talent pool’ of available candidates and drive up the cost of recruiting non-executive directors. The trend also presents challenges for improving the representative diversity of boards.
IUA companies continue to take a great interest in corporate governance developments and, through the association, have contributed to a wide range of regulatory reviews in recent months. These include revisions to the UK Corporate Governance Code and, most importantly, the Senior Insurance Managers Regime.
“The increasing pressure on non-executive directors is a key concern across the insurance industry,” commented IUA Director of Market Services Chris Jones. “While the underlying principles behind many regulatory initiatives are laudable, they may have the unintended consequence of undermining the very corporate governance advantages they seek to promote.
“This is because non-executive positions are becoming less attractive to existing and future candidates. There is an increasing obligation for them to focus more on a company’s day-today activities and take on duties that go beyond their traditional responsibilities. As a result it seems that companies are finding it more and more difficult to attract and retain the individuals they need to sit on boards in a non-executive capacity.
“Such directors play a vital role for many management teams, bringing wider industry experience and important business contacts. They can also offer an independent viewpoint enabling a more rounded, unbiased decision-making process.”
The IUA’s most recent comments on corporate governance have been made in response to a Prudential Regulation Authority consultation paper on board responsibilities. While there are no measures here that directly increase the burden on non-executive directors, the proposals on board composition do need to be considered in the light of other regulatory initiatives.
The IUA also argued that the regulator adopt a proportionate approach to corporate governance, taking into account the differing size and sophistication of firms across industry sectors. For example, under the current UK Corporate Governance Code, a ‘best practice’ for FTSE 350 companies is to have half of their board as non-executive directors. Smaller businesses, however, may find it impractical to achieve and so, for them, it should remain a guiding principle rather than a prescriptive rule.
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Director of Communications
International Underwriting Association
Tel: 0207 617 4449
Mobile: 07876 758 637
Notes to Editors:
About the IUA
The International Underwriting Association of London (IUA) represents international and wholesale insurance and reinsurance companies operating in or through London. It exists to promote and enhance the business environment for its members.
The IUA’s London Company Market Statistics Report shows that premium income for the company market in 2013 was £17.445bn with a further £6.831bn controlled by London but written elsewhere. These results are based on a comprehensive survey of 57 companies and combined give an overall intellectual and economic premium total of £24.276bn for the London company market.