Beyond regulation: How board competence drives effective compliance risk management in insurance brokerage firms
Keywords:
Board Competency, Compliance Risk, Insurance Brokerage Firms, Risk Management, Financial RegulationAbstract
This study aims to examine the influence of board of directors' competencies on compliance risk management in insurance brokerage firms (PPA). The competencies evaluated encompass five key dimensions: relevant and adequate knowledge, understanding of applicable regulations, strategic management capability, experience in non-bank financial institutions and/or other relevant sectors, and possession of insurance broker certification. A quantitative approach was employed using a survey method, targeting board members of insurance brokerage firms located in Jakarta, Bogor, Depok, Tangerang, and Bekasi (Jabodetabek). Data were collected through structured questionnaires and analyzed using multiple linear regression. The findings reveal that, collectively, the board's competencies have a significant impact on compliance risk management. Moreover, several individual competency dimensions demonstrate a positive and statistically significant effect on the effectiveness of managing compliance risks. These results highlight the critical importance of enhancing directors’ competencies to minimize regulatory violations and penalties, while also supporting the effective implementation of risk management practices within the insurance brokerage industry.
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