Diversity of Board Practices in Sub-Saharan Economies: Evidence from Insurance Companies in Uganda

Abstract

The study aimed at establishing the diversity of board practices of Insurance companies in Uganda. Board practices are conceptualized as; appointment of directors, inducting board members, planning board business, board structure and composition, board roles and responsibilities, board development, board meeting optimization, board compensation, board member retirement, liability protection and board evaluation. The study reviews evidence against the hypothesis that there is no statistically significant difference in the manifestation of diversity of board practices among Insurance companies in Uganda. The hypothesis was tested on an effective sample of 108 board chairpersons of companies regulated by insurance regulatory authority. The study was descriptive cross-sectional survey on a univariate variable of board practices. The data was analyzed using descriptive statistics. The findings of the study indicated that the studied board practices were all statistically significant. The dimensions with the highest manifestation were board structure and composition, board meeting optimization then roles and responsibilities. Inducting board members, board development, board evaluation and appointment of directors fell in the moderate category. Whereas, board compensation, board member retirement and liability protection results projected the least manifestation. The Null hypothesis was rejected (Mean = 3.42, CV = 42.85, t = 11.84436, p = 0.000 < 0.05). The findings imply that management of insurance companies must attach importance to all board practices since they are a cycle as a gesture for good corporate governance practice. Going forward managers of insurance companies in Uganda by borrowing a leaf from the study findings realize the importance of a clear compensation policy for board members, a clear retirement policy of board members and a clear policy on director’s liability protection. The practice will attract committed, experienced and skilled board members to serve on the boards of insurance companies in Uganda. This study underlined the need for the Ugandan government through the regulator IRA to address the issue of unclear policy, by developing comprehensive board practices and a comprehensive corporate governance framework to provide a robust institutional framework governing appointment of directors, inducting board members, board structure and composition, roles and responsibilities, board development, planning board business, board meeting optimization, board compensation, liability protection, board member retirement, board evaluation. It is further recommended that companies should internally have a board development committee.