Do board meetings matter in the insurance industry?

Abstract

This study examines the link between formally scheduled board meetings, profitability, and solvency in the United Kingdom’s (UK) property-casualty insurance industry. A panel data design using 83 UK insurers writing property casualty insurance for the period 2004/5 to 2013/4 is employed. The study finds that increasing the number of board meetings scheduled each year enhances overall attendance rates. However, outside directors with financial experience have relatively better attendance rates than their counterparts with less technical expertise. The study also finds that overall board meeting attendance and directorate turn-out at strategy and remuneration meetings improve profitability but not solvency. In addition, board meeting attendance by outside directors falls when prior period profitability is sound, suggesting a ’complacency-effect’ among non-executives. The lack of significance between solvency and both total and outside director attendance also hints at a ’dependency-effect’, whereby boards rely on professional managers (actuarial technocrats) to optimize financial strength and condition. Our results have implications for insurers and regulators in deciding on the suitability of candidates applying for board-level positions.