LONDON (Reuters) - Insurers in Britain should hire a wide range of board members to avoid “groupthink” and improve how companies are run, the Bank of England proposed on Tuesday.
The BoE, which supervises insurers, proposed changes to its rules that make senior managers at insurers directly accountable for their actions.
British companies in general have been urged by the government to appoint more women board members to boost diversity.
Shareholder advisory group PIRC last month criticised Britain’s largest insurer Prudential (PRU.L) for the absence of a target to increase the number of women on its board.
The Bank of England proposed that insurers should have a policy of considering a “broad set of qualities and competencies” when recruiting board members, and have a policy to promote diversity among board members.
The Bank said diverse boards would provide a more effective challenge to management as well as bringing a broader set of perspectives. These should help boards to identify a wider range of risks and be better able to understand their impact, which would in turn provide greater protection for policy holders, the BoE said in a consultation paper.
It proposed no quotas for making boards more diverse, and said companies were best placed to determine themselves the details of their policy to promote diversity.
Jacey Graham, co-founder of Brook Graham, a diversity consultancy at Pinsent Masons’ law firm, said the insurance industry in general had been behind the curve in addressing this issue. But he also said he was encouraged by the work being done now by his clients in this sector, especially on gender diversity.
“The focus also needs to be on diversity in executive committees, however, for the industry to truly change and reap the business benefits,” Graham said.
Reporting by Huw Jones and Carolyn Cohn. Editing by Jane Merriman