Exemplary corporate governance in insurance

Cocolife navigates ethical leadership through compliance and risk management

In a competitive insurance market like the Philippines, corporate governance and ethical leadership are key not only to becoming a successful business and sustaining long-term growth but also to avoiding disasters that can lead to a loss in profit or reputation.

To achieve this, Cocolife, one of the leading insurance companies in the Philippines, makes sure that it is headed by a competent, working board to foster success, support the effective performance of the company’s functions, and develop a symbiotic relationship among all employees.

A study conducted by global research firm Diligent Institute found that the top fifth of performers on corporate governance in the S&P 500 index outperformed the bottom fifth by 15% over two years. Furthermore, the study also highlighted how companies with poor governance during crises tend to underperform in their sector by 35%.

Similarly, the World Economic Forum found that ethical leadership matters now more than ever. It noted that managers who demonstrate higher levels of moral leadership have stronger connections with colleagues and thus lead to better business performances.

Corporate governance and ethical leadership, through a set of rules, practices, and procedures that guide the direction and control of a company, is crucial to promoting transparency, accountability, and integrity. For Cocolife, these regulations manifest in their risk management and compliance systems that have helped mitigate dangers operationally and financially.

“The primary management strategies employed by Cocolife begin with maintaining a risk register that identifies and registers key strategic risks. This is constantly updated and formally reviewed and reported, in part or in full, to the Risk Oversight Committee (ROC),” Atty. Jan Darryl Dimaculangan, senior vice-president and head of Cocolife’s Risk Management and Compliance Division, said.

These risks are then managed individually following an assessment based on a systematic analysis of both the impact and likelihood ratings of each risk. After this initial assessment, the risks are reassessed, taking into account the existing mitigation controls and documented accordingly. 

“By assessing both risks without and with mitigation controls, we can analyze the effectiveness of the controls in place to mitigate the risks. This is an important step in testing assumptions about the effectiveness of existing controls,” Atty. Dimaculangan added.

As a driver in achieving the company’s strategic and business plan objectives, Cocolife’s top management sets the tone for managing risks, which is then passed down to the smallest units and finally to individual employees and members of the sales force.

To identify risks, Cocolife collaborates with the divisions, departments, and units of the company as they are considered the owners of each process. In line with the ISO Standard, this procedure allows the Risk Management and Compliance Division (RMCD) to have a better grasp of how the business runs at the ground level and provide different perspectives on the identified risks. 

The RMCD is responsible for overseeing the risk-taking activities of Cocolife and its subsidiaries, as well as reviewing and assessing Cocolife’s compliance with applicable laws and rules of conduct in every aspect of the company’s operations. For the risk management function, the RMCD reports functionally to the ROC while the division reports to the company’s Corporate Governance Committee for its compliance function. 

Cocolife’s RMCD also conducts regular reviews and scanning of applicable laws to stay updated with changes in government regulations. To maintain good governance and ethical leadership, the division advises the management of the latest regulatory issuances relevant to its operations.

Boosting governance and leadership further, the RMCD provides analytical support to executive-level committees in formulating risk management strategies and making functional risk decisions. The division also helps implement the approved risk management policies and ensure they are integrated into the business operations. 

In an effort to improve its compliance system, Cocolife has integrated compliance into the company’s daily business activities and strategic planning. Additionally, the company has also begun to coordinate compliance processes based on the established frameworks as well as develop and implement policies about compliance.

With Cocolife being one of the country’s top insurance brands that employ thousands of agents all over the country, training these employees regarding compliance and risks is crucial in maintaining the company’s reputation, ensuring regulatory adherence, and empowering agents to effectively serve clients while mitigating potential risks.

Cocolife conducts regular training for onboarding agents and refresher training for existing agents, in accordance with the Market Conduct Guidelines issued by the Insurance Commission. During the training, agents are made familiar with possible fines and penalties in case of violation of any regulation.

“Further, the Company disseminates the agents as well a copy of the Sales Conduct and Discipline Handbook to ensure that the agents are informed of the rules and procedures about the matter. Further, the company reports as well to the Insurance Commission of the Negative List of Agents quarterly,” Atty. Dimaculangan added.

By embedding risk management and compliance into every level of the organization, Cocolife safeguards its operations and strengthens its reputation as a trusted insurance provider. With its commitment to constantly prioritize sound governance practices and ethical leadership, it continually sets a standard for the insurance industry, demonstrating that true success lies not just in growth, but in doing so with integrity and responsibility.

“In Cocolife, we are people-focused — both with how we service our customers and value our employees. We make it a point to provide the best possible servicing in the industry. From the time a customer purchases any of our products up to the time a claim has to be paid, we make it as convenient and efficient for them. Of course, they put their trust in us, so it is our mission to repay them for that trust,” Atty. Jose Martin A. Loon, President and CEO of Cocolife told BusinessWorld.

To find out more about Cocolife’s corporate governance and their insurance products, visit their website at https://www.cocolife.com.

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