MENA Insurers Urged To Strengthen Corporate Governance

by Lorys Charalambous, Tax-News.com, Cyprus

02 June 2010

The United Arab Emirates Minister for the Economy, Sultan Bin Saeed Al Mansoori, has called on the insurance and financial sector to push forward with the adoption of modern corporate governance and transparency measures to ensure the Middle East and North Africa (MENA) insurance industry realises its "vast potential for growth."

Speaking at a workshop, under the theme ‘the Changing Landscape in the Insurance Industry’, Mansoori said: “From a wide perspective, the insurance sector is where the public puts their faith; to hedge against the uncertainties in the world. The insurance sector is a critical pillar in the overall functioning of the market. A strong insurance sector implies robust economic fundamentals.”

Ahmed Humaid Al Tayer, Governor of the Dubai International Finance Centre (DIFC), in his address, called on lawmakers, regulators, companies, and stakeholders in the MENA region’s insurance industry "to express a firm commitment to raising standards of corporate governance.” He stressed that all key players need to participate in and support the development of higher standards, on a basis that is harmonized among MENA insurance companies. “The management of insurance companies should build strong corporate governance frameworks that create an empowered Board of Directors, a solid control environment, increased levels of transparency and disclosure and well-defined shareholders,” he said.

Dr Nasser Saidi, Executive Director of Hawkamah and Chief Economist of the DIFC Authority called on insurance regulators and commissioners in the MENA region to implement corporate governance reform. He urged regulators to encourage companies to adopt the corporate governance principles outlined by the International Association of Insurance Supervisors (IAIS) for insurance companies and to adopt uniform insurance corporate governance standards and guidelines. He also called on regulators in the region to upgrade insolvency laws.

At an industry level, Saidi said the region’s insurance sector should ensure that accounting, actuarial and auditing standards are comprehensive, documented, transparent and consistent with international standards. He stressed the importance of the insurance industry's adoption of International Financial Reporting Standards; the guidelines of the Islamic Financial Services Board; and the standards of the Accounting and Auditing Organization for Islamic Financial Institutions for Shari’a compliant insurance.

The Workshop was established to progress Hawkamah's initiative to raise corporate governance standards in the insurance sector in the MENA region. As part of its ongoing work, in 2007, Hawkamah established a MENA Corporate Governance Task Force with a mandate to develop a set of corporate governance guidelines for the insurance sector and build the corporate governance capacity of the industry. The Task Force, comprised of members of the Arab Forum of Insurance Regulatory Commissions (AFIRC) and private sector representatives, has contributed significantly to identifying the corporate governance challenges of the insurance industry in the region and provided vital recommendations for industry development. In March 2009, the Task Force issued the Hawkamah-AFIRC Policy Brief on Corporate Governance for the Insurance Industry, which outlined basic corporate governance standards for the insurance sector in MENA.

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