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IRDAI Master Circular on Corporate Governance

IRDAI vide Circular bearing reference no: IRDAI/F&I/CIR/82/5/2024 dated May 15, 2024, issued Master Circular on Corporate Governance, 2024 (“ Corporate Governance Master Circular 2024 ”), which repealed the following IRDAI Circulars:

1. Approval under Section 34A of the Insurance Act, 1938 bearing reference no. 031/IRDA/CIRCOMPLIANCE/AUG-2007 dated August 23, 2007.

2. Issuance of ESOP/Sweat Equity to CEO/Managing Director/Whole-time Director-Compliance with Section 34A of the Insurance Act, 1938 bearing reference no. 043/IRDA/CIR/COMPLIANCE/MAR-2009 dated March 17, 2009.

3. Guidelines for Corporate Governance for insurers in India bearing reference no. IRDA/F&A/GDL/CG/100/05/2016 dated May 18, 2016.

4. Addendum to Guidelines for Corporate Governance for insurers in India bearing reference no. IRDA/F&A/GDL/CG/100/05/2016 dated June 06, 2016

5. Remuneration proposals of ED/MD and CEOs dated March 19, 2019.

6. Revised Guidelines on Stewardship Code for Insurers in India bearing reference no. IRDAI/F&A/GDL/CPM/045/02/2020 dated February 07, 2020.

7. Submission of an application under Section 34A of the Insurance Act, 1938 bearing reference no. IRDAI/Life/CEO Appointment/2020-21 dated July 22, 2020.

8. Appointment or Continuation of Common Director(s) u/s 48A of Insurance Act, 1938 bearing reference no. IRDAI/F&I/CIR/MISC/183/9/2022 dated September 02, 2022.

9. Clarification on Circular Appointment or Continuation of Common Director bearing reference no. IRDAI/F&I/CIR/MISC/191/9/2022 dated September 13, 2022.

10. Profit-related Commission to Non-Executive Director(s) bearing reference no. IRDAI/F&I/CIR/MISC/26/01/2023 dated January 30, 2023.

11. Guidelines on Remuneration of Directors and Key Managerial Persons of Insurers bearing reference no. IRDAI/F&I/CIR/MISC/26/01/2023 dated June 30, 2023.

The Corporate Governance Master Circular 2024 shall apply to all Insures except foreign companies engaged in the re-insurance business through a branch established in India. Insurers have been provided with the time till June 30, 2024, to ensure compliance with its provisions.

Major highlights of the Master Circular are as follows:

  • 1. Board of Directors – Provisions related to the Composition of the Board, Role and Responsibilities, and appointment of Common Directors, Fit and Proper Criteria and Control Functions are specified in the Corporate Governance Master Circular 2024.
  • 2. Conflict of Interest – Role of Board: The Board of Insurers shall ensure compliance with the provisions of conflict of interest specified in the Corporate Governance Master Circular 2024.
  • 3. Delegations of Functions – Committees of the Board: The Board have been advised to form various committees and delegate their functions in compliance with provision specified in the Corporate Governance Master Circular 2024. The following Committees shall be constituted by all Insurers:
  • i. Audit Committee: The Board of every Insurers shall constitute an Audit Committee as per Section 177 of the Companies Act, 2013. The Audit Committee shall comply with the provisions specified in the Corporate Governance Master Circular 2024.
  • ii. Investment Committee: The Board of every Insurers shall constitute an Investment Committee comprising of at least two Non-Executive Directors, CEO, CFO, CIO, CRO and the Appointment Actuary. The Investment Committee shall comply with the provisions specified in the Corporate Governance Master Circular 2024.
  • iii. Risk Management Committee: The Board of every Insurers shall constitute a Risk Management Committee. The Risk Management Committee shall comply with the provisions specified in the Corporate Governance Master Circular 2024.
  • iv. Policyholder Protection, Grievance Redressal and Claims Monitoring Committee (PPGR & CM Committee): The Board of every insurer shall constitute a Policyholder Protection, Grievance Redressal and Claims monitoring Committee which shall comply the provisions specified in the Corporate Governance Master Circular 2024.
  • v. Nomination and Remuneration Committee: The Board of every Insurer shall constitute Nomination Remuneration Committee (NRC) which shall be chaired by an independent director. The NRC shall comply with the provisions specified in the Corporate Governance Master Circular 2024.
  • vi. Corporate Social Responsibility Committee: Insurers shall constitute Corporate Social Responsibility Committee as per Section 135 of the Companies Act, 2013 which shall comply with the provisions specified in the Corporate Governance Master Circular.
  • vii. With-Profits Committee: Life Insurers shall constitute the With-Profit Committee comprising of an Independent Director, CEO, CFO, Appointed Actuary and an Independent Actuary. The functions of the With-Profits Committee shall be in accordance with the provision of Master Circular on Actuarial, Finance and Investment Functions of Insurers.
  • viii. Ethic Committee: Insurers may constitute Ethic Committee which shall comply with provisions with respect to roles and responsibilities specified in the Corporate Governance Master Circular 2024.
  • 4. Key Management Persons: Key Management Persons of every insurer shall comply with the responsibilities specified in the Corporate Governance Master Circular 2024. In addition to this, provisions concerning roles and responsibilities of CEO/Managing Director/Whole-Time Director and Chief Compliance Officer are specified in the Corporate Governance Master Circular.
  • 5. External Audit – Appointment of Statutory Auditors: The Board of every insurers shall appointment Statutory Auditors and shall ensure the statutory auditors appointed are compliant with the regulatory requirements.
  • 6. Disclosures Requirements: Insurers shall disclose in their annual account, the additional requirements, information concerning meetings of the Board and its Committee as per the provisions specified in the Corporate Governance Master Circular.
  • 7. Remuneration: Private Sector Insurers shall comply with the remuneration requirement specified in the Corporate Governance Master Circular 2024.
  • 8. Whistle-Blower Policy: Insurers shall formulate the “Whistle-blower” policy which shall covers the following aspects:
  • i. Awareness of the employees that such channels are available, how to use them and how their report shall be handled.
  • ii. Independent Assessment and Investigation Process
  • iii. Robust Anti-retaliation policy
  • 9. Stewardship Principles: Insurers shall comply with the Stewardship Principles specified in the Corporate Governance Master Circular.
  • 10. Reporting Requirement: Insurers shall file a report on the status of compliance with the provisions of the Corporate Governance Master Circular on an annual basis. This report shall be filed within 3 months from the end of the financial year i.e. before June 30. The formats for reporting status of compliance shall be specified in the Master Circular on Submission of Returns.

Source category: IRDAI

Attachments

  • /2024/395_2024_05_22_-_IRDAI_Master_Circular_on_Corporate_Governance_for_Insurers,_2024.pdf

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