Page 27 - Life Insurance Today July - December 2020

and controls. These guidelines therefore amplify on certain - Policyholder Protection Committee - Asset Liability
issues which are covered in the Insurance Act, 1938 and Management (in case of life insurance companies) -
the regulations framed there under and include measures Other Committees - Nomination and Remuneration
which are additionally considered essentially by IRDAI for Committee - Corporate Social Responsibility - With
adoption by insurance companies. Profit - ethics (Non Mandatory Committee)

4. Key Management Persons - MD/CEO/Whole-time
The Authority had initially issued Guidelines on Corporate Director - Appointed Actuary - Statutory Auditors
Governance for life insurance companies vide circular dated
5. Disclosure Requirements
5th August, 2009. The Authority had also issued separate
guidelines for appointment of reappointment and 6. Outsourcing Arrangements
remuneration of MD/CEO/ WTD as well as other Key 7. Interaction with & Reporting to the Authority (IRDAI)
Management Persons (KMPs), as also the Appointment of
8. Whistle Blower Policy
statutory auditors of insurers through various circulars.
9. Evaluation of Board & Independent Directors
In view of the extensive changes to the governance of
companies brought about by the Companies Act, 2013, it Corporate Governance - IRDAI set a very
was decided to review the various guidelines of the stringent role for the Life Insurers'
Authority relating to the governance of insurance
companies. After due consultation with the industry Directors:
representatives and other stakeholders and professionals, 1. Performance Role: In this, director performs various
the Authority has drawn out the revised Guidelines on activities aimed at improving the overall performance
Corporate Governance for insurance companies. The of the corporation like: A source of know-how,
revised guidelines combine the stipulations regarding the expertise and external information; and caters to
Corporate Governance practices, appointment of MD/CEO/ needs of the corporation for networking, representing
WTD and other KMPs as well as the appointment of and adding status. Outside directors act as "specialists"
statutory auditors of insurers. Those had already become in different functions like finance - including banking and
applicable from FY 2016-17 onwards. These guidelines are investment, marketing, law, engineering, HR,
applicable to all insurers granted registration by the environment and general management. Some time
Authority except that: they act with the media on behalf of the corporation).
(i) Reinsurance companies may not be required to have 2. Conformance Role: In this, the director is concerned
the Policyholders' Protection Committee;
with ensuring that the company follows the policies and
(ii) Branches of foreign reinsurers in India may not be procedures laid down by the board. This is done
required to constitute the Board Audits Mandatory through executive management and involves
Committees as indicated therein. monitoring and evaluating own performance. The
independent evaluation of top management's
All life insurers are advised to ensure compliance with the performance overcomes the danger of adoption of a
guidelines in the following major structural elements of narrow vision of the executive board.
Corporate Governance in their procedural aspects:- 3. Strategic Role of Directors (Board): To supervise the
1. Board of Directors - Composition - Role & Responsibility
quality of strategic thinking of the top management/
- Fit & Proper Criteria - Disclosures about Meetings of
executive committee and take corrective measures to
the Board & its Committees
guide them to develop strategies to achieve corporate
2. Control functions goals. To develop strategy in the following three
3. Delegation of functions of the Board -Mandatory levels:-
Committees - Audit - Investment - Risk Management a. Systematic Level Strategy (Boards shall develop

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Life Insurance Today July - December 2020 27