As part of the Board’s internal governance practices, the Board has to consider and adopt appropriate steps and measures towards succession planning through a process of proper identification and nurturing of individuals for taking up directorship and KMP (Key Managerial Personnel) positions of the insurer. The insurer has to adopt a plan in this regard. The Board has to review such succession plan on an annual basis
Unveiling a host of new regulations as part of “Insurance Regulatory and Development Authority of India (Corporate Governance for Insurance Companies) Regulations, 2024”, the IRDAI has mandated, every insurer will have in place a board approved Environmental, Social and Governance (ESG) framework by April 1.
The activities under ESG are to be monitored by the Board and the framework will be reviewed by the board on annual basis. Also, to facilitate the climate risk management, a comprehensive Climate Risk Management framework will be established by the board of insurer keeping in view their size, nature and complexity of operations, said the IRDAI.
The IRDAI’s new Regulations will come into force from 1st April 2024 and will be reviewed once in every three years from the date of notification, unless the review or repeal of amendment is warranted earlier.
Some of the other key regulations announced by the IRDAI are-
-Every insurer shall ensure optimum composition of Independent Directors and non-executive directors, subject to a minimum of three Independent Directors. The MD/Chief Executive Officer shall be a Whole-time Director of the Board and the chairperson of the Board shall be appointed with prior approval of the IRDAI
-In accordance with Schedule IV of the Companies Act, the Independent Directors will meet at least once in a year to evaluate the performance of directors other than Independent Directors. Similarly, there shall be an evaluation of the Independent Directors by the other members of the Board, as required in Schedule IV of the Companies Act.
-As part of the Board’s internal governance practices, the Board shall consider and adopt appropriate steps and measures towards succession planning through a process of proper identification and nurturing of individuals for taking up directorship and KMP (Key Managerial Personnel) positions of the Insurer. The insurer has to adopt a plan in this regard. The Board has to review such succession plan on an annual basis.
-Chief Compliance Officer (CCO) will be the designated Compliance Officer for submitting returns, reports and applications for necessary approvals. CCO has to be appointed for a minimum fixed tenure of not less than three years. Further, insurers have to initiate action for filling up of such vacant positions on a priority basis, to ensure that it shall not remain vacant for a continuous period of more than 180 days.
-The insurers have to collect and maintain details of their respective KMPs(Key Managerial Personnel) in such manner and format as specified by the IRDAI and will also keep the IRDAI informed of any appointment or change in the individual person holding the KMP position.
-Insurance companies should play an active role in the general meetings of investee companies and engage with the managements at a greater level to improve their governance. This will result in informed decisions by the parties and improve the return on investments of insurers which will ultimately benefit the policyholders.
Insurers will have to formulate a board approved Stewardship Policy .
The regulations will be applicable to all insurers granted registration by the IRDAI except the branches of foreign reinsurers in India, said the IRDAI.