Examining corporate governance in the insurance sector in Uganda
Lusiba, George William
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The research problem initiates from the New Vision (2014, August 7) and Daily Monitor (2014, August 30) which reveal that of the four top managers of UAP Insurance company and SWICO that were grilled by the police, over forged insurance linked to the Mukono-Katosi road fraud. This led to the researcher to question the corporate governance in the insurance sector. The objectives rotate around finding out the measures of corporate governance in the insurance sector, challenges of corporate governance in the insurance sector, causes of the challenges of corporate governance in the insurance sector, and solutions to the challenges of corporate governance in the insurance sector. The study involved a cross-sectional research design with a descriptive survey design by simple random sampling 30 staff, which is 10 staff from each of the three companies; in Statewide Insurance Company Ltd (SWICO), UAP Insurance Company and Insurance Company of East Africa (ICEA), with ethical considerations in place while administering the questionnaires. Validity and reliability of the research instrument were guaranteed and the data was analyzed by using both descriptive and inferential statistics. The study findings on the measures of corporate governance in the insurance sector were that insurance companies have a code of personal and business conduct, have women on their boards; the CEO and chairman are different; have financial expertise among directors; and cared for stakeholders while making board decisions. However, the challenges of corporate governance in the insurance sector included loss of the capital as the biggest, followed by the threats of bankruptcy; borrowing excessively via long-term loans; restricted independency of managers in implementing their own decisions in the company; bribery, acquaintance and corruption. In addition, the study found the causes of the above challenges of corporate governance in the insurance sector to be frequent use of golden handshakes for upper management as the top cause, although followed by exorbitant salaries for upper management; appointment of directors based on friendships rather than ability; too frequent board meetings; lack of ethics in business dealings and weakness in supervision and enforcement power. As recommendations, insurance companies should have compliance of law in letter and spirit; ensure that board committee have control over management decisions; separation of the roles of CEO and chairman; monitoring the actions, policies, and decisions of the corporations and its agents; employment of competent and independent external auditor and improve the timing, accuracy and scope of financial reporting.