This issue leads a potential conflict of interest. Consequently, Tf Ltd faces the risk of not being registered on the London Stock Market.

The second corporate governance is the possibility of a family domination in the board’s decision-making process due to the presence of all non-executive directors from the same family. The role of non-executive directors (NEDs) in the boardroom is to offer an objective and unbiased perspective; they are not corporate workers. NED’s bring value and protect the interests of the shareholders through their different perspectives.

The last corporate governance relates to the board members’ more than 15-year duration. This can raise concerns about preserving the independence of the board and the diversity of opinions. Evaluating the total duration of the board and adding new members on a regular basis will help to foster new perspectives. Every year, the board should be evaluated on things like diversity, composition, and achievement of objectives cooperation. It should be determined through individual evaluations whether each director continues to contribute in an effective manner.

(b) – As the secretary of the board, I would advise the chairperson to think about leaving the company where they may have a conflict of interest. If implemented, this would show a dedication to averting any potential conflicts of interest and would promote sound corporate governance. It could also minimize issues and allow the chairperson to continue in their role with TF Ltd.

Additionally, reviewing board member term limits and adjusting them from over 15 years to a range of 9 – 12 years can further promote fresh perspectives while ensuring a balance between continuity and renewal. This approach fosters collaborative and well-informed corporate governance, preventing any single entity from dominating decision-making. Furthermore, as the world undergoes continuous change, boards must adapt to stay relevant. While maintaining some degree of continuity allows board members to build effective working relationships and mutual trust, an extended tenure might lead to complacency. With shifting priorities and evolving challenges, it’s essential to recognize that issues faced by boards today differ greatly from those a decade ago.

Question 4 – Learning Outcome 4 (20 marks)

(a) The primary impact on the underwriting process stems from policyholders falling outside GR plc’s risk tolerance. The backbone of an insurer’s business lies in the Underwriting Authority Guidelines, which outline the MGA’s authority to accept, modify, or reject potential policyholders. When policyholders lack insurance coverage, they become more exposed to higher-risk situations. This situation holds the potential to undermine the company’s ability to maintain a well-balanced and profitable portfolio. To uphold ethical standards, the MGA is obligated to act with honesty and fairness on the insurer’s behalf. They must diligently follow the underwriting guidelines of the insurers they represent, operate in utmost good faith, and collect all necessary data to make informed underwriting decisions before assuming any risk.

(b) Having policyholders who are outside of GR plc’s risk appetite have the greatest influence on the underwriting function. Underwriting Authority Guidelines serve as the backbone of an insurer’s book of business by defining the MGA’s capacity to accept, alter, or reject a potential insured. When policyholders are uninsured, they are more vulnerable to higher-risk scenarios. This has the potential to compromise the company’s ability to maintain a balanced and profitable portfolio. To adhere the code of ethics, MGA should dear fairly and honestly when acting on behalf of insurer, they should faithfully execute the underwriting guidelines of the insurers they represent and act in the utmost good faith and gather all data necessary to make a proper underwriting decision before putting an insurer on risk.

(c) A slow transfer of data from the MGA may cause operational difficulties when handling the claims, recording written premium, setting up a premium receivable, or any other production-dependent task. Further, the GR plc faces the risk of maintaining an incomplete and inaccurate population of production. Another impact is when it comes to customer service, for example when a customer has a policy from MGA but because of a slow transfer of data, it does not appear in GR plc system which will create bad customer experience.

(d) GR plc can enforce the monthly reporting of underwriting production to be performed via a data feed between the MGA and the GR plc system, at a specific date, based upon when the production was bound and/or issued. Further, the data should be on a transactional level, whereby, all premiums, endorsements, cancellations, and/or claims are clearly identified and exhibited. The production reports should then be reconciled to the prior month’s reports and applicable accounting files to identify any discrepancies. In addition, the insured or the policyholder sees the MGA as trusted professional organization and experts on insurance matters, they should provide clear information about the quality and financial standing of the insurers they represent.