Boards genuinely value the benefits that diversity brings, including the avoidance of “group-think” and the addition of a variety of different perspectives.
The dynamics and culture of the board is being given more thought, and is being more carefully planned for. Personality fit is high on any recruitment process, to facilitate an INED adding value by engaging with the rest of the board and the management team.
This trend will become more prevalent and will continue to be driven by shareholder pressure, regulatory scrutiny, and meeting substance requirements. We predict a younger, more diverse, demographic of candidates in the INED space giving boards greater choice.
Effectively the appointment of an INED to a board will become as professional a process as appointing a senior executive.
Will the captive insurance industry look itself in the mirror and question how board appointments should be made? Should captive and other insurance companies have a structured and a robust process in how they appoint INEDs? Undoubtedly, but there is a long way to go.
A recent study by Coutts found networking (89 percent) and business referrals (88 percent) remain the selection routes of choice for companies when appointing NEDs. Executive search and advisory firm Opus Executive Partners advises that only 4 percent of NEDs are interviewed formally.
The increasing use of professional, well-connected and independent INED recruitment outsourcing services is a strong trend which insurance company boards will surely embrace as they seek to follow best practice.
Malcolm Cutts-Watson, is managing director of Cutts-Watson Consulting and Nick Graham is chairman of OSA Recruitment and a dedicated specialist of NED recruitment. They can be contacted at: email@example.com
Cutts-Watson Consulting, Non-executive directors, Captive governance: A practical guide for independent NEDs on captive boards, Captives, North America