Underwrite with The Corporate Governance Index

The corporate Governance Index (CGI) was launched on Tuesday by both the Minority Shareholder Watchdog Group (MSWG) and Bursa Malaysia. The objective is to provide some reliable gauge for investors to rate local public listed companies based on their level of adherence to globally accepted corporate governance standards. Companies will be rated based on conformance, performance and engagement in regards the various level of compliance to the exchange’s listing requirements including disclosure standards and fairness as well as transparent to their shareholders, and Malaysian code on Corporate Governance standards.

With this CGI launch, it should make the work of the professional liability underwriters easier in identifying the firm’s liability exposures and so on. This is definitely good news as Product liability, Professional Indemnity, Errors & Ommissions and Directors & Officers’ Liability can be much more efficiently underwritten.  However the set back is that MSWG have yet to have a proper and tested methodology of working out those indices, and may therefore takes sometimes to materialise at an effective level.

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3 comments for “Underwrite with The Corporate Governance Index

  1. July 13, 2009 at 02:01

    There are alot of good things that had been introduced in the past but comes implementation, things just got loss or screwed up….just like out RM4.3 billion spent for using English as a medium for teaching of Science and Maths. THose people who screwed this up are still sitting there and yet have the tongue in cheek to propose “Back to BM” and some even talked about Jawi! These people ought to be screwed…out of the mainstream civil services of this country.

    CGI is supposed to be a good thing not just from the perspectives of UW professional liability risks, we can use it for property as well. If the CGI of that public listed company is poor then alot of things can actually happen….warehouse and factory got burnt down..and then burnt down the following year…again. CGI’s objective is to focus on the well being of the senior management and their performance, if need be explained in short.

    Of course you may be right….not sure where we are heading eventhough CGI becomes a reality… A bad CGI can be manipulated!

  2. Anonymous
    July 13, 2009 at 00:23

    The CGI has no relevance to Product Liability but certainly for professional liability for instance D & O particularly.

    In order to entice and attact more overseas investment (FDI), CGI is timely and a proper and professional approach / methodology should be expedited. Just wonder, how many public listed companies in Malaysia are in compliance with the LOCAL regulatory requirement not to mention about the GLOBALLY accepted corporate governance, with due respect.

    The D&O opportunity deriving from public listed companies, various research and effort already put in by the local active D&O underwriters but the results appeared to be far less satisfactory. The core reason being that that the awareness and education still very lacking. Viewing the quality of directors being appointed to the BOD, it is still very much far away from what it should be. All these have impacted the CGI and hence investors have less if not confidence to invest in Malaysia.

    Frankingly speaking, I am not optimitic that this situation is going to change in the near future.

    Not even the CGI you talked about, the current announcement of the lifting of the 30% bumiputra mandatory shareholding would not bring much “stimulus” & “omh!” from overseas or local investors.


    • July 15, 2009 at 00:53

      CGI can be useful even for the property underwriters; today as we underwrite large risks involving timber and furniture manufacturing factories, it is best to check out the company’s audited accounts… With CGI, this may speed up the underwriting process if the proposal is a public listed company.

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