INSURERS and mutual benefit associations (MBAs) scored higher in the Asean Corporate Governance Scorecard (ACGS) for the year 2019 but the Insurance Commission said there is still room for improvement, especially in terms of disclosure and transparency.
The insurance industry and MBAs collectively registered an average ACGS score of 45.9 in 2019, up by 3.36 points from 42.54 in the previous year. The 2019 assessment conducted by the Institute of Corporate Directors (ICD) covered a total of 119 entities regulated by the IC, of which 56 are non-life insurers, 32 are life insurers, and 31 are MBAs.
The IC attributed the increase in the total average score to the Commission’s issuance of Circular Letter No. 2021-26 that mandated the creation and maintenance of company websites.
However, Insurance Commissioner Dennis B. Funa noted that the ICD report for 2019 also revealed the area of Disclosure and Transparency or the disclosure of corporate governance-related documents is of “special concern.”
“The IC highly commends the efforts of our insurers and MBAs to improve their corporate governance practices, which contributed to the improvement of said industries’ overall performance, as evidenced by the 3.36-point increase in the ACGS total average score of said entities for the year 2019. Nevertheless, there is a great opportunity to enhance the ACGS performance of said insurers and MBAs, especially in the areas of disclosure and transparency. The IC strongly encourages said regulated entities to take advantage of such opportunity,” Funa said in a statement.
In the area of disclosure and transparency, the IC said regulated entities only scored an average of 8.59 points out of a maximum of 25, as many insurers and MBAs failed to disclose their Annual Reports, Notices and Minutes of Annual General Meetings and Board Charters in their respective websites.
“Some companies were even found to have websites that were either not working or under construction on the date of assessment and review. It should be stressed that disclosure and transparency are two major demands of good corporate governance that deter corporate fraud and malpractice,” he added.
For the other areas, insurers and MBAs scored 5.53 out of 10 in “Rights of Shareholders,” 9.92 out of 15 in “Equitable Treatment of Shareholders,” 3.97 out of 10 in “Role of Shareholders in Corporate Governance” and 16.38 out of 40 in “Responsibilities of the Board.”
In 2019, insurers and MBAs also earned an additional 1.48 points in “Bonus and Penalties,” by which assessment area points are added for company practices beyond minimum standards and points are subtracted for poor corporate governance practices.
The ACGS is a tool used to evaluate companies’ corporate governance practices. It was developed based on international benchmarks and industry-leading corporate governance practices of the Asean and the world. It relies primarily on publicly available and easily accessible information, such as, but not limited to, companies’ annual reports, information posted in company websites, announcements, circulars, articles of association, minutes of annual shareholders’ meetings or excerpts thereof, corporate governance policies, codes of conduct, and sustainability reports.
The ICD was accredited by the IC to conduct the yearly assessment of the covered companies.