IRDAI Issues Comprehensive Corporate Governance Guidelines

Insurance regulator IRDAI on Wednesday released comprehensive corporate governance guidelines, including a cap on salary of CEOs and policy on whistle blowers.The revised guidelines, which came against the backdrop of changes in the Companies Act, 2013, combine the stipulations regarding the corporate governance practices, appointment of MD/CEO/whole time director and other Key Management Positions as well as the appointment of statutory auditors of insurers.

These are applicable from 2016-17 onwards, the corporate governance report said.Insurers are well advised to put in place a 'whistle blower' policy, where-by mechanisms exist for employees to raise concerns internally about possible irregularities, governance weaknesses, financial reporting issues or other such matters, it said.The importance of Corporate Governance has received emphasis in recent times since poor governance and weak internal controls have been associated with major corporate failures, it said.

As regards the insurance sector, the regulatory responsibility to protect the interests of the policyholders demands that the insurers have in place, good governance practices for maintenance of solvency, sound long term investment policy and assumption of underwriting risks on a prudential basis, it said.The emergence of insurance companies as a part of financial conglomerates has added a further dimension to sound Corporate Governance in the insurance sector with emphasis on overall risk management across the structure and to prevent any contagion and to ensure financial stability, it added.