[Skip to content]

Sign up for our daily newsletter
The Actuary The magazine of the Institute & Faculty of Actuaries

‘Increasingly prescriptive regulations’ may leave insurers struggling to recruit non-executive directors

Insurers may soon struggle to hire non-executive directors (NEDs) because “increasingly prescriptive regulation” puts pressure on these roles, the International Underwriting Association (IUA) has said.


Board room meeting © iStock
Rising responsibilities may "shrink the talent pool" of available candidates and drive up cost of hiring non-executive directors. © iStock

The IUA said rules such as UK Corporate Governance Code and the senior insurance managers regime (SIMR) could put off potential NEDs and reduce the corporate scrutiny they provide.

Chris Jones, director of market services at the IUA, said: “The increasing pressure on non-executive directors is a key concern across the insurance industry.

“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.”

The UK Corporate Governance code is a set of principles of corporate governance aimed at companies listed on the London Stock Exchange. The aim of SIMR is to make senior staff, including non-executive directors, responsible for the conduct of their firms. 

The IUA warned that rising responsibilities may “shrink the talent pool” of available candidates and drive up the cost of hiring NEDs. 

Jones said non-executive positions were 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,” he said.

“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.”

Jones said NEDs played “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,” he said.

The IUA said regulators should adopt a “proportionate approach” to corporate governance, taking into account the different size and sophistication of firms across industry sectors.