IRDAI released some new rules for Insurance Companies, Check Here

The Insurance Regulatory and Development Authority of India (IRDAI) has recently released a master circular that outlines operational and procedural aspects to be followed by all insurers. One of the key requirements stated in the circular is that insurance companies must obtain prior approval for the appointment of their Board Chairperson.

Key Points from the Circular

• The circular, titled “Master Circular on Corporate Governance for Insurers, 2024,” is applicable to all insurers in India, except foreign companies engaged in re-insurance business through a branch established in the country.
• The circular has immediate effect, but insurers have until June 30, 2024, to ensure compliance with its provisions. However, specific timelines mentioned in the circular for certain compliances will remain unchanged.
• The new framework aims to enhance the governance capacity of key stakeholders, including the Board, Senior Management, and Key Persons in Control Functions, to effectively and prudently manage the business of insurers.
• The Board of Directors of insurers must ensure an optimal composition of Independent Directors and Non-Executive Directors, with a minimum of three independent Directors.
• The quorum for board meetings should be either one-third of the total board strength or three directors, whichever is higher.
• The circular emphasizes the importance of having competent and qualified Directors on the Board who can drive strategies to sustain growth and protect the interests of stakeholders, especially policyholders.
• Insurers are required to implement a “whistle-blower” policy that allows employees to raise concerns internally about potential irregularities, governance weaknesses, financial reporting issues, or other relevant matters. Employees can report such concerns confidentially to the Chairperson of the Board, a Committee of the Board, or the statutory auditor.

Conclusion

The master circular issued by the IRDAI introduces new guidelines for insurers in India to enhance their corporate governance practices. By ensuring the appointment of qualified Directors, establishing a robust whistle-blower policy, and complying with other provisions outlined in the circular, insurers will be better equipped to manage their businesses effectively and protect the interests of stakeholders, including policyholders.