BFL Canada has appointed an M&A corporate advisor to its board of directors because the founder, Barry Lorenzetti, was looking for someone outside insurance to offer diversity.
Norman Steinberg, who is independent but isn’t an insurance professional, had only been to one board meeting when he spoke with Insurance Business - but he said he already knew what he was hired to do.
“When you bring someone from the outside, you get a fresh perspective on things,” Steinberg said. “The best functioning boards are the boards that have general diversity. Diversity means diversity in terms of expertise, in terms of geography, in terms of experience and it terms of gender and ethnicity.”
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Though Steinberg said he doesn’t think independents are necessarily unbiased, he said they do provide another level of analysis.
“I wouldn’t use the word unbiased, maybe it’s a nuance. When you have a private company like BFL it’s populated by insiders who are basically its management,” Steinberg said. “One of the things Barry Lorenzetti, the chairman, said he was looking for was an outside view as opposed to an inside view.”
Meanwhile, Andy Barile, an independent insurance advisor, said insurance professionals can capitalize on independents giving them a reality check – however, there are potential downsides too.
“Independent directors, because of their very nature of having experience, may cause ‘constructive friction’,” he said. “However, the inexperience of captive owners can show through when they have executed reinsurance agreements or fronting agreements and do not understand the consequences of these agreements until litigation occurs.”
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