IRADI Master Circular on Corporate Governance for Insurance Companies
The Insurance Regulatory and Development Authority of India (IRADI) has come out with a master circular to provide various operational and procedural aspects, to be adopted by all insurers. Among other things, the insurance companies are required to seek prior approval for the appointment of their Board Chairperson, effective immediately. Existing chairpersons have been given until March 31, 2026, or the end of their current terms, whichever comes first, to comply with the new norm.
Further, as per the new norms, Insurer shall ensure an optimum composition of Independent Directors and Non-Executive Directors in its Board, subject to a minimum of three independent Directors. Insurer shall also ensure that the Board comprises of competent and qualified Directors to drive the strategies in a manner that would sustain growth and protect the interests of the stakeholders in general and policyholders in particular.
The Circular shall apply to all insurers except foreign companies engaged in re-insurance business through a branch established in India. This new framework aims to strengthen the capacity of key stakeholders responsible for the insurer's governance--such as the Board, Senior Management, and Key Persons in Control Functions--to effectively and prudently manage the insurer's business.
The circular becomes effective upon issuance. However, insurers are given time up to June 30, 2024, to ensure compliance with its provisions. Further, where specific timelines are specified for certain compliances, such timelines shall remain the same.
