The Insurance Regulatory and Development Authority of India (IRDAI) on Wednesday released a master circular on corporate governance for insurers.
Although the circular becomes effective upon issuance, the insurance companies are given time up to June 30, 2024 before they are mandated to adhere to the provisions of this 70-page circular.
The latest set of instructions carries a set of disclosure requirements, among a number of other requirements, for insurance companies.
These provisions tell the board to ensure that the information with respect to the following is disclosed in the annual accounts.
Insurers need to disclose the following:
1) Commission and expense ratios: Quantitative and qualitative information on the insurance company’s financial and operating ratios, viz. incurred claim, commission and expenses ratios.
2) Solvency margin: Actual solvency margin details vis-à-vis the required margin.
3) Persistence ratio: Insurers engaged in life insurance business need to disclose the persistence ratio of policies sold by them.
4) Growth rate: Financial performance including growth rate and current financial position of the insurance company.
5) Risk management: They also need to give a description of the risk management architecture.
6) Number of claims: Details of number of claims intimated, disposed of and pending with details of duration.
7) All pecuniary relationships or transactions of the Non-Executive Directors vis-à-vis the insurance company will also be disclosed in the Annual Report.
8) Elements of remuneration package (including incentives) of MD & CEO and all other directors and key management persons.
9) Payments made to group entities from the policyholders funds.
10) Any other matters, which have a material impact on the insurer’s financial position.
Fit and proper criteria for directors
The circular also states that the maximum age limit for non-executive directors, including the chairperson, will be 75 years.
ALSO READ | Why is looking at a life insurance company’s claims settlement ratio important? MintGenie explains
Additionally, an independent director may be appointed for a maximum of five consecutive years on the board and will be eligible for re-appointment for the second term on passing of a special resolution by the insurer.
No independent director will hold office for more than two consecutive terms subject to approvals required from time to time. Also, the post of Managing Director (MD), CEO or Whole-time Director will not be held by the same incumbent for longer than 15 years.
You are on Mint! India’s #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!
Download The Mint News App to get Daily Market Updates.
Published: 23 May 2024, 03:39 PM IST