BY NKECHI NAECHE-ESEZOBOR–The Chairman of Nigerian Insurers Association, NIA, Segun Omoshein, has said it’s members will align with directive of the National Insurance Commission, NAICOM, on tenure limit for Executive Director and CEOs.
He disclosed this yesterday during a media parley with Nigeria Association of Insurance and Pension Editors ( NAIPE), in Lagos.
He however said there are few concerns the association wants the commission to look into.
“Our position is to Aline with the directive of the commissioner, however there are few concerns we had around the definition of EDs which we have put forward to the commission. It’s the prerogative of the commission whether to accede what we have put forward or reject.
“As an association we know there are certain things we can appeal to our regulator, if we see the significant impact it might have in an industry.
He added that “in the circular there was a cumulative period for EDs, where an EDs is appointed he can’t spend more than the cumulative period of 15years. You and I know the reality of things in these institution, MDs are better choosen from within except in some circumstance where you can’t find a replacement within, we go outside. We still want a situation where that part can be encouraged for people to be choosen from within and given a mandate to run full term if accepted by the commission. it’s just an appeal by our Association “
As of today no fewer that seven managing director/CEO of insurance companies in the country will vacate their position following the circular on tenure limit for EDs and CEOs..
In pursuant to the powers conferred on the National Insurance Commission (the “Commission”) by the National Insurance Commission Act 1997 (the “NAICOM Act”), and in line with the Nigerian Code of Corporate Governance 2018, (“the NCCG, 2018”) the Commission recently issued a circular dated 22nd November 2022 titled – Tenure Limit for Executive Directors of Insurance and Reinsurance Companies (the “Circular”).
By the Circular, the Commission introduces tenure limits for Executive Directors (EDs) of Insurance and Reinsurance Companies in Nigeria with effect from 1st January 2023 and enjoins all Insurance and Reinsurance companies to give consideration to the provisions of the Circular in their future engagement of Chief Executive Officers (CEOs) and EDs.
The Circular stipulates that CEOs and other EDs of Insurance and Reinsurance Companies shall serve a maximum tenure of ten (10) years comprising two terms of 5 (five) years each, subject to a single approval of the Commission.
Furthermore, the Circular provides that an ED who becomes a CEO in the same company shall serve a cumulative tenure not exceeding 15 (fifteen) years. In addition, the Circular provides that where an ED changes portfolio by moving to another position of ED equivalent within the same company, the period spent in the previous company as ED will count for the purpose of determining the maximum tenure of the said ED.
In respect of Insurance Companies that are a product of a merger, acquisition, takeover or any other combination, the ten-year period shall include the pre and post-combination service years as a CEO or as ED.
The Circular also stipulates that there shall be a transitional period of 12 (twelve) months from the effective date of the Circular in respect of existing appointments and that all CEOs and EDs who have served for 10 (ten) years shall cease to continue in such capacity, after the transition period of 12 (twelve) months.