An overview of the Corporate Governance Guidelines for Insurance and Reinsurance Companies in Nigeria, 2021


By: Bayo Onamade and Busayo Balogun Agusto

On 17th March, 2021 the National Insurance Commission (“Commission”) issued the Corporate Governance Guidelines for Insurance and Reinsurance Companies in Nigeria, 2021 (the “NAICOM Guidelines”).

The NIACOM Guidelines, which replace the NAICOM Code of Good Corporate Governance for the Insurance Industry 2009, will become effective on 1st June, 2021 and are to be read and interpreted in conjunction with the provisions of the Nigerian Code of Corporate Governance, 2018 (“NCCG”).

Following the issuance of the NCCG, other regulators have similarly issued guidelines applicable to their sectors, which are to complement the NCCG. For example, in October 2020, the Securities and Exchange Commission (“SEC”), developed the SEC Corporate Governance Guidelines (“SCGG”) for public companies. The National Pension Commission (“PENCOM”) last year, also issued its “Guidelines on Corporate Governance for Pension Fund Operators, which are to be used in concert with the NCCG and which replace the Code of Corporate Governance for Licensed Pension Operators 2008.

The NAICOM Guidelines apply to all insurance and reinsurance companies in Nigeria – which must also comply with the NCCG.

What precisely do the NAICOM Guidelines add to the already existing body of corporate governance regulations?

To begin with, it is interesting to note that several key provisions in the NAICOM Guidelines are more stringent than those contained in the NCCG.

This development is hardly surpsing, however, given that the NAICOM Guidelines govern a highly regulated and specific sector; in contrast with the NCCG which is of wider applicability as it governs both public companies and private companies as well as companies operating in a wide range of sectors.

The NAICOM Guidelines are therefore in our view, an attempt to address the specific peculiarities, rigors and demands of the insurance sector – in any way that the NCCG may have failed to do so. Although the NAICOM Guidelines are silent on what should occur where there is a dissonance between the NCCG and the NAICOM Guidelines, it is expected that although the NAICOM Guidelines are silent on what should occur where there is a dissonance between the NCCG and the NAICOM Guidelines, it is expected that in the event of any inconsistency, the stricter provisions will prevail.

Outline of the Guidelines The NAICOM Guidelines are divided into 13 sections; whereas the NCCG is divided into 28 sections.

Notable differences between the NCCG and the NAICOM Guidelines.

1. Minimum and maximum number of directors



Clause 2.0 (ii) of the NAICOM Guidelines requires Insurance/reinsurance companies not to have less than seven (7) BOARD members and more than fifteen (15) members on their Boards.

Minimum and maximum number of directors

The NCCG does not specify the minimum or maximum number of directors rather, clause 2.1 provides that the Board should be of a sufficient size to effectively undertake and fulfil its business; to oversee, monitor, direct and control the Company’s activities and be relative to the scale and complexity of its operations.

2. Percentage of Non-Executive Directors (NEDs) to Executive Directors (EDs)

Section 2.0 (iii) of the NAICOM Guidelines specifies the percentage of NEDS that reinsurance and insurance companies should have.

The Boards of reinsurance and insurance companies are to consist of Executive and Non-Executive Directors out of which not more than 40% of the members must be in the executive capacity.

This means that at least 60% of the board members must be NEDs.

Percentage of Non-Executive Directors (NEDs) to Executive Directors (EDs)


The NCCG does not specify any percentage or ratio of NED to EDs, but clause 2.3 provides instead that there should be an appropriate mix of Executive, Non-Executive and Independent Non-Executive members such that majority of the Board are Non-Executive Directors; while recommending that most of the NonExecutive Directors should be independent

3. Independent directors (INED)

Section 2.0 (vii) of the NAICOM Guidelines requires the membership of Boards to include at least one Independent Director, who does not represent any particular shareholding interest nor hold any business interest.

Independent directors (INED)

The NCCG does not specify the minimum number of INEDS a company should have, but it does indicate in principle 2.3 (b), that majority of the Board members should be Non-Executive Directors; while most of the Non- Executive Directors should be independent.

Under section 7.2.2 of the NCCG, INEDs are prohibited from being representatives of a shareholder, but only to the extent that such shareholder has the ability to control or significantly influence Management.

In addition, under section 7.2.1 of the NCCG, an INED may be a shareholder, provided that such INED does not possess a shareholding in the Company, the value of which is material to the holder such as will impair his independence or is in excess of 0.01% of the paid up capital of the Company.

4. Percentage of NEDS to Eds

The NAICOM Guidelines specify the tenure of the NEDS, with section 2.0 (viii), requiring Non-Executive Directors not to be re-nominated and appointed for more than 3 terms of 3 years each i.e. a total of 9 years.

Percentage of NEDS to Eds

The NCCG does not specify the tenure for NEDS. Principle 12.8 simply provides that NEDs should serve for a reasonable period on the Board.

The NCCG however highlights the need for continual injection of new energy, fresh ideas and perspectives. This should be effected by ensuring the periodic appointment of new Directors to replace existing NEDs.

The NCCG allows companies the discretion/flexibility to determine how often they may replace existing NEDs. With regard to INEDS however, under clause 7.2.9, an INED is one who has not served on the Board for more than nine years from the date of his/her first election.

5. Minority shareholders protection

The NAICOM Guidelines contain provisions to ensure adequate representation of minority interests on the boards of public limited companies.

Under clause 2.0 xiii, all Public Limited Liability Insurance/Reinsurance Companies are mandated to “provide a seat for minority shareholder” [SIC] on the Board.

This provision does not specify which minority shareholder should be represented on such boards, the criteria for such appointments or even the number of such appointments.

This may pose difficulties with practical application

Minority shareholders protection

The NCCG does not contain any such provisions requiring board representation of minority shareholders.


The protection offered to shareholders under the NCCG, includes ensuring the equitable treatment of shareholders and the protection of their statutory and general rights, particularly the interest of minority shareholders and ensuring that minority shareholders are adequately protected from abusive actions by controlling shareholders.

6. Board Meeting Attendance

Under clause 2.1 of the NAICOM Guidelines, each board member is required to attend not less than 75% of the meetings of the Board annually

Board Meeting Attendance

Under the NCCG, there is no minimum board attendance requirement for directors individually.

Clause 10.2 of the NCCG, however provides that every Director should endeavour to attend all Board meetings, as attendance records of Directors should be among the criteria for the re-election of a Director.

Clause 10.1 of the NCCG, requires the Board to meet at least once every quarter.

7. Committees

Clause 2.2 of the NAICOM Guidelines expands the number of board committees to be established.

In addition to establishing committees responsible for nomination and governance, remuneration, audit and risk management (in accordance with principle 11.1.6 of the NCCG), reinsurance and insurance companies are also required to establish committees responsible for – (a)Finance, Investment and General Purpose AND (b) Compliance.


Under the NCCG, Board Committees responsible for nomination and governance; remuneration, audit and risk management are required to be established.

8. Board Evaluation

Clause 4.0 of the NAICOM Guidelines, requires an annual Board performance evaluation to be carried out by an independent consultant to be appointed at the Annual General Meeting.


Under the NCCG, there is no requirement to conduct externally facilitated board evaluation exercises every year. Rather, under clause 14.1 of the NCCG, board evaluations are to be facilitated by an independent external consultant at least once in 3 years.

9. Internal Audit Function

Under section 5.0 of the NAICOM Guidelines, each insurance/reinsurance company under an insurance group is required to have a separate internal audit unit. Furthermore, under clauses 5.0 (iv), the report of the external assessment of Internal Audit functions is required to be submitted to the Commission not later than 2nd quarter of the succeeding year.


This implies that an assessment of the internal audit function is required to be undertaken every year.

Internal Audit Function

Under the NCCG, the Board has the discretion regarding whether or not to have a separate internal audit function. This is implied in Principle 18.2, which provides that where the Board decides not to establish such a function, internally or outsourced, sufficient reasons should be disclosed in the Company’s annual report with an explanation as to how the Board has obtained adequate assurance on the effectiveness of the internal processes and systems such as risk management and internal control. With regard to external assessments, in contrast with the NAICOM Guidelines, which requires an annual external assessment, under clause 18.6 of the NCCG, an external assessment of the effectiveness of the internal audit function is required to be undertaken least once every three years by a qualified independent reviewer to be appointed by the Board.

10. Head of Internal Audit Unit

The Internal Audit Unit of reinsurance and insurance companies must be headed by a professionally qualified Accountant not below the rank of an Assistant General Manager (AGM) or its equivalent. (Section 5.0 (iii)).

Head of Internal Audit

Under section 18.3 of the NCCG, although the head of internal audit is required to be a member of senior management, such person is neither required to be a professionally qualified accountant nor occupy a minimum position of Assistant General Manager or above. What is required, in addition to being a member of senior management, is to be a professional with relevant qualifications, competence, objectivity and experience; and to be registered with a recognised professional body.

11. External Auditors

Under the NAICOM Guidelines, an External Auditor cannot be appointed for a maximum term of 8 years. Specifically, under section 6.0, the tenure of an appointed External Auditor shall be for period of four (4) years in the first instance. External Auditors may also be reappointed for a further period of four (4) years and no more. In addition, audit teams are required to be rotated at least once every two years.

External Auditors

The tenure for External Auditors under the NCCG is for a maximum period of 10 years.


Under section 20 of the NCCG, external audit firms may be retained for no longer than ten years continuously.


In addition, a rotation of the audit engagement partner is required to be undertaken every five years in order to preserve independence.



The newly issued NAICOM Guidelines, which will become effective on 1st June, 2021, are applicable to insurance and reinsurance companies. However, the decision of the Commission to formulate additional guidelines, despite the prevailing NCCG, serves as a reminder that the existence of a body of regulations should not deter aspirations to adopt better and improved corporate governance standards (beyond the scope of what is already in place). Standards which are better suited to address peculiarities within certain industries and business operations.

Although the scope of the NAICOM Guidelines are limited in their capacity and scope, companies should be encouraged to draw from other codes whether or not such codes are applicable to the sectors in which they operate or even their domicile jurisdictions. This may appear to be contradictory as it is widely accepted that senior executives generally tend to view ever-expanding and multiplicity of regulations as unwelcome, with some companies struggling to implement and track compliance.

But it is important to adjust our perspectives – and to critically examine the business case for going over and beyond compliance; as a conduit for building sustainable businesses and healthy corporate structures – towing the path of creativity, innovation and growth.

In the longer term, the set of winners will emerge among those who place themselves for responsible leadership, those who strive to exceed the minimum legal standards in controlling risks; thereby positioning themselves to obtain the wider business benefits that going beyond compliance can achieve.


Bayo Onamade
– Bayo is a governance and compliance professional and an Associate of the Institute of Chartered Secretaries and Administrators of Nigeria.

Busayo Balogun Agusto
– Busayo is a legal practitioner and corporate governance and sustainability enthusiast who works in the Governance Office in Oando Plc.

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