IRDA to issue Corporate Governance Guidelines for Insurance Companies
May 28 2009: Corporate Governance is understood as a system of financial and other controls in a corporate entity and broadly defines the relationship between the Board of Directors, Senior Management and Shareholders.
The Corporate Governance framework clearly defines the roles and responsibilities and accountability within an organization with in-built checks and balances. In case of listed companies, the stipulations in this regard are contained in Clause 49 of the Listing Agreement.
In case of Insurance Companies, Insurance Regulatory Development Authority (IRDA) has been entrusted with the regulatory responsibility to protect the interests of the policyholders and accordingly would like to ensure that appropriate governance practices are in place in the insurance companies for maintenance of solvency, sound long-term investment policy and assumption of underwriting risks on a prudential basis, particularly as the insurance companies are yet to be listed.
The IRDA has outlined in general terms, governance responsibilities of the Board in the management of the insurance functions under various Regulations notified by it covering different operational areas. It has now been decided to put them together and to issue comprehensive guidelines on Corporate Governance for adoption by Indian insurance companies.
The Authority accordingly proposes to issue the Guidelines on “Corporate Governance Guidelines for Insurance Companies”. It has invited the comments/suggestions of all stakeholders (including insurers, policyholders, academics, analysts etc.) on the Exposure Draft by June 15, 2009.
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