MANILA, Philippines — The Philippine insurance industry was able further raise the bar in terms of corporate governance last year, the Insurance Commission (IC) said over the weekend.
In a statement, Insurance Commissioner Dennis Funa announced that insurance firms and mutual benefit associations (MBA) were able to score an average of 41.34 points in the 2018 ASEAN Corporate Governance Scorecard (ACGS) Report for the Insurance Industry.
He said this is a 1.61-point increase from the industry’s score in 2017.
“This shows that there is a continuous improvement in the performance of the life insurance, non-life insurance, and MBA sectors since the adoption of the ACGS in 2015. For four years, the insurance industry showed an average increase of 2.28 points,” Funa said.
To improve corporate governance in the insurance industry, the IC issued Circular Letter
14-2013, mandating all insurance companies and MBAs to adopt the ACGS.
The ACGS is a tool used to evaluate corporate governance practices. It was developed based on international benchmarks, such as the Organization for Economic Co-operation and Development Principles of Corporate Governance, the International Corporate Governance Network (ICGN) Governance Principles, as well as industry-leading practices from ASEAN and the world.
For the 2018 assessment, the Insurance Commission (IC) assessed 116 regulated entries comprising of 30 life insurance companies, 56 non-life insurance companies, 14 MBAs and 16 micro-MBAs.
The Institute of Corporate Directors was accredited by the IC to conduct the yearly assessment of the covered companies.
Funa said Pru Life Insurance Corp. of UK obtained the highest score with 105.19, followed by Insular Life Assurance Co. Ltd. with 104.53 points.
Based on the IC’s assessment, the life insurance sector continued to perform better compared to the other sectors, with an
average score of 56.98 for 2018.
The average score of the non-life insurance sector and MBA sector were 33.57 and 40.28, respectively.
Out of the five core principles of corporate governance, the industry showed positive performance in the area of equitable treatment of shareholders with 8.76 points out of 15 maximum points in the 2018 assessment.
“The 2018 report noted that while other areas need to be improved, disclosure of corporate governance-related documents should be given special attention, including Notice of Annual Stockholders or General Meeting, Minutes of Annual Stockholders or General Meeting, and Annual Report with section on suitability,” the IC said.
Funa lauded the insurance industry for the improvement in the average score garnered in the 2018 assessment.
“I would like to commend the insurance industry for the increase in the ACGS average score, which serves as a testament to the commitment of the insurance industry to improve its governance practices,” he said.
“While this is a notable accomplishment, the insurance industry’s average score it is still considered low in comparison with the banking sector. This should be taken as an opportunity for them to review their current governance practices for further improvement, including the utilization of technology, and a challenge to ensure that their corporate governance practices are at par with regional standards,” he said.