The proposed director should not not be working in the capacity of the chief insurance executive / specified person or any other officer responsible for soliciting insurance business for or on behalf of the insurance agent, intermediary or insurance intermediary while holding the position of director in the insurance company
Reversing its earlier decision, Insurance regulator IRDAI has now allowed appointment or continuation of common director representing insurance agent, intermediary or insurance intermediary on the board of insurance company with some conditions.
The proposed director should not not be working in the capacity of the chief insurance executive / specified person or any other officer responsible for soliciting insurance business for or on behalf of the insurance agent, intermediary or insurance intermediary while holding the position of director in the insurance company said IRDAI in detailed circular on Friday.
There should be no conflict of interest or prejudice against the interest of the policyholders as a result of such appointment.
Insurer can’t pay any remuneration to non-executive directors without prior approval of the IRDAI. However, insurers are permitted to pay sitting fees, as per applicable norms.
A resolution should be passed approving such appointment by the Board of insurance company/agent/intermediary/insurance intermediary.
The common director has to recuse himself/herself from the discussion and voting on any matter/discussion pertaining to:
-Any area having potential conflict of interest;
-Insurer/Agent/Intermediary/Insurance intermediary where she/he is holding common directorship.
-The number of directorships held by the common director can’t exceed, at any point of time, the maximum number of directorships specified under the extant law including the Companies Act, 2013.
-The Insurer/Agent/Intermediary/Insurance intermediary shall comply with all other applicable laws.
-An individual, already acting or proposed to act as executive director / whole-time director on the Board of the Insurer/Agent/Intermediary/Insurance intermediary, can’t be appointed as nominee/common director.
-The common director may be appointed as chairperson on the board of the insurance company / agent / intermediary / insurance intermediary subject to necessary safeguards, to be put in place at all the times, to protect the interest of policyholders and to avoid the conflict of interest as may arise due to such appointment.
– The insurers has to file a certificate on an annual basis, duly certified by the CEO, confirming compliance with the provisions of this circular on financial year basis. The compliance should be filed with the IRDAI not later than 30th April of the succeeding financial year.