Mapping collective expertise within a Board of Directors

Assignment

The Chairman of the Board of Directors of a private health insurance firm wishes to strengthen the collective expertise of his Board of Directors to address changes within the insurance industry and meet the requirements of the Solvency II Directive

Issues : Transforming the business
Sectors : Financial services

Context

The company is a generalist private health insurance firm under the healthcare insurance regulations, with a national network. It is a key player within the sector.

The application of the Solvency II Directive by the ACPR (French Prudential Supervision and Resolution Authority) tightens the requirements in terms of governance. The private health insurance firm has to demonstrate that its Board of Directors is fully competent within 7 areas: organisation, governance, business model, market, strategic planning, financial analysis and legal requirements.

Its Board of Directors consists of around 20 directors with a very diverse range of training, experience and skills. Throughout their term, each director undergoes training and gradually takes on their responsibilities as a member, vice-chairman and later chairman of a commission, committee or subsidiary.

The Chairman of the Board of Directors wishes to have a detailed picture of the collective expertise within the Board of Directors, in order to carry out its function in terms of strategic direction and control whilst adhering to the legal requirements of the Solvency II Directive. This review will help define training requirements and profile of suitable new directors to be appointed in order to strengthen the Board of Directors’ operational input.

Eurosearch & Associés involvement

Eurosearch & Associés suggests mapping the directors’ collective expertise.

With the relevant company’s divisions (legal, compliance and risk), the firm defines a grid setting out the maturity of the knowledges required by the ACPR. It complements it with a second and lighter one related to expertise: leading a working group, project management, consensus building, and internal and external communication. Each level of maturity is written down and detailed in an understandable way, on a scale of 1 to 6.

A self-assessment process is implemented; each director positions himself individually on these grids and expresses his training needs. Meetings with chairmen and vice-chairmen enable the individual self-assessments to be reviewed, calibrated and compared to each other.

By the end of this process, those skills which are fully mastered and implemented at a high level by several directors are identified. Conversely, areas mastered by only one director, or appearing as a collective weakness will also be identified. Capability to evolve and behaviour of the directors is also assessed.

Results

Two reports are drawn up: the one provided to the Board of Directors is anonymous, whilst the one handed to the Selection and Remuneration Committee identifies the directors’ names. The aim of the first report is to raise awareness amongst all the directors of potential risks, as well as training required for the board. The second report enables the Committee to identify individual training needs for each director and define specific requirements and skills relevant for future recruitment of new directors.

The various roles (member, vice-chairman or chairman of commission, committee or subsidiary) are described in mission statements, which set out the skill levels required in order to carry out these roles, referring to the same assessment grids. With this, the Committee has access to a tool for monitoring and improving each director’s ability to carry out the specific roles assigned to them.

Moving from each director’s individual input to the Board of Directors’ collective expertise makes it possible to identify needs in terms of governance, to define the required profile of the candidates to be hired, and put the Board of Directors onto a learning curve to strengthen its performance.