Board characteristics and financial performance in the insurance industry: An international empirical survey

There are few studies in the literature on how the characteristics of boards of directors affect the performance of insurance companies. The purpose of this research is to investigate the characteristics of a company’s board that can have a significant impact on financial performance in the insurance sector. For this purpose, we performed a dynamic pooled regression model to test the impact of a wide range of board-specific factors. The survey has been conducted on an international sample of 119 listed insurance companies operating in the period 2009-2019. The sample includes companies from three geographical areas: North America, Europe and Asia. Our findings provide evidence that board structure and board independence are the most relevant governance factors, with a potentially positive impact on insurers’ market performance. These findings indirectly outline the opportunity for insurance companies to improve corporate fair value by strengthening internal governance models through effective board policies, an adequate qualification of board members and a well-balanced membership of the board. At the same time, there is still room for improvement as regards the level of board independence by strengthening internal governance policies in order to maintain an adequate number of independent and non-executive board members. The study upgrades the evidence arising from the existing literature by providing new elements to support a deeper understanding of the effects of insurance companies’ board characteristics on financial performance. Empirical results may also have important implications for both managers and policy makers.