Page 16 - Life Insurance Today July - December 2020

competitive environment of Indian life insurance industry. Before going to discuss various gamut of Corporate
Financial or Money Management is all about controlling life Governance of life insurers let us see what may encompass
insurance company's finances so that they can make better in it. 'Governance' refers to "all processes of governing,
decisions, improve performance, solvency margin & net whether undertaken by a government, market or network,
worth. Indian Life Insurers always, as a statutory measure, whether over formal or informal organization or territory
appoint accountants and officials in their internal audit and whether through laws, norms, power or language."
departments and statutory audit is also being conducted Governance goes beyond politics and beyond headlines -
by external auditors to keep proper track of their income, it's related to our day to day working - to make sense of
associated fraudulent activities and spending. this phenomenon as an intricate web of people, policy and
performance that shapes life insurers.

Corporate governance is the combination of rules,
processes or laws by which insurance businesses are
operated, regulated or controlled. The term encompasses
the internal and external factors that affect the interests
of insurers' shareholders, customers, suppliers, government,
regulator and management. It is the system of principles,
policies, procedures, clearly defined responsibilities and
accountabilities used by stakeholders to overcome the
conflicts of interest inherent in the life insurance players.
It invariably ensures transparency and balanced economic
development in the organization.

Fig 1: Main Pillars of Corporate Governance

The Definition of Corporate Governance:
The Governance is the responsibility and accountability for
the overall operation of an insurer. Governance is a shared
process of top level leadership, policy making and decision
making. Corporate Governance is a relatively new issue for
the Indian insurance industry. It has assumed greater
importance in the context of the irregularities that had
happened to companies like Enron, Xerox, WorldCom etc.
(in the global economy). The concept of corporate
governance is defined in several ways because it potentially
covers the entire gamut of activities having direct or indirect
influence on the financial health of corporate entities.

Corporate Governance is a system by which business Figure 2: FACETS OF CORPORATE GOVERNANCE
corporations are directed and controlled. Corporate
Governance also spells out the rules and procedures for
corporate decision-making. It specifies the distribution of Corporate governance includes the processes through
rights and responsibilities among different participants in which insurers' objectives are set and pursued in the
the corporation. Ensuring better corporate performance context of the social, regulatory and market environment.
through involvement in strategy formulation and policy This includes monitoring the actions, policies, practices, and
making, corporate conformance through top decisions of corporations, their agents, and ostentatious
management's supervision and accountability to the stakeholders. It has integrated frame work of 4Ps or it is of
stakeholders come under the ambit of corporate people, purpose, processes and performance. The 4Ps have
governance. important roles in channelizing resources of any company.

16 July - December 2020 Life Insurance Today