CORPORATE GOVERNANCE in the local insurance industry improved in 2018, the Insurance Commission (IC) said.
Based on the 2018 ASEAN Corporate Governance Scorecard (ACGS) Report for Insurance, the IC said the local insurance sector recorded an average score of 41.34 points in 2018, up 1.61 points from the previous assessment.
For the 2018 report, the IC assessed 116 insurance companies and mutual benefit associations (MBA) comprised of 30 life insurers, 56 non-life insurance firms, 14 MBAs and 16 micro-MBAs.
Out of the insurance companies surveyed, Pru Life Insurance Corp. of UK (Pru Life UK) obtained the highest score of 105.19, followed by Insular Life Assurance Co. Ltd. with 104.53 points.
The life insurance sector continued to perform better compared with other sectors in 2018, logging an average of 56.98 points. Meanwhile, MBA and non-life sectors scored 40.28 points and 33.57 points, respectively.
Pru Life UK, Insular Life, FWD Life Insurance Co., Sun Life of Canada (Philippines), Inc. and Philippine American Life & General Insurance Co. were the top five life insurance firms with governance scores ranging between 86.92 and 105.19 points.
Meanwhile, the top five non-life insurers in terms of corporate governance last year include Pacific Cross Insurance Inc., National Reinsurance Corp. of the Philippines, MAA General Assurance Philippines, Inc., BPI/MS Insurance Corp., and Pacific Union Insurance Co., fetching scores from 59.29 to 82.07 points.
The top four MBA firms in 2018, garnering scores between 71.60 and 80.60 points, were CARD Mutual Benefit Association, Praxis Fides Mutual Benefit Association, Kasagana-Ka MBAI, and Knights of Columbus Fraternal Association.
“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,” Insurance Commissioner Dennis B. Funa said in the statement, adding that the insurance industry showed an average increase of 2.28 points for four years.
In the 2018 assessment, the insurance industry performed well in the area of equitable treatment of shareholders out of the five core principles of corporate governance, scoring 8.76 points out of the maximum points of 15.
“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/General Meeting, Minutes of Annual Stockholders/General Meeting, and Annual Report with section on suitability,” the statement from the IC read.
However, Mr. Funa noted that the industry’s score is still “considered as 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.”
The ACGS, a tool used to evaluate corporate governance practices, was developed based on international benchmarks such as the Organization for Economic Cooperation and Development, Principles of Corporate Governance, the International Corporate Governance Network Governance Principles, as well as industry-leading practices from ASEAN and the world.
Circular No. 14-2013 was issued in 2013 to mandate all insurance firms and MBAs to adopt the ACGS to develop their company website and post their responses to the ACGS questionnaire with supporting documents.
This was part of the IC’s move to raise the standard of corporate governance in the insurance industry.
Sought for comment, Pru Life UK President Antonio G. De Rosas said the company was able to receive the highest ACGS score among local insurers two times in a row.
“It is our culture as part of the Prudential Plc group to place utmost importance to corporate governance, compliance and risk management,” Mr. De Rosas said in a text message on Sunday. “As a life insurance company, our only commodity is our promise basked up by our reputation to deliver to customers financial security especially when they need it most.” — Karl Angelo N. Vidal