Insurers may shortly have to overhaul their boards with the Insurance Regulatory and Development Authority of India (Irdai) emphasizing on governance compliance norms.
The chief executive of a well-known insurance company said, “A stronger board is the maiden step towards listing on the exchanges. While we already have a strong system on the boards in the industry, it is the next step towards strengthening the structure.”
As per the IRDA, the goal of the IRDA is to make sure that the structure, responsibilities and functions of board of directors are well outlined.
It has asked shareholders to elect or nominate directors from several areas of financial and management expertise such as accountancy, law, insurance, pension, banking, securities, economics, with qualifications and experience that is suitable to the company.
“Retired insurance company CEOs or managing directors will not only be able to understand the business needs, but also provide expertise for decision making. Hence, boards will now have more number of such people,” said the head of a mid-size private general insurance company.
The board will be needed to create appropriate systems to regulate the risk appetite and risk profile of the company. It will also allow identification and measurement of major risks to which the company is exposed to and develop an effective risk management system.