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Corporate governance guidelines have been issued by the IRDA in order to regulate the insurance business in India. in this article, we will discuss the Corporate governance requirement & IRDA Compliance for an Insurance company.
Corporate Governance is the process of promoting corporate fairness, transparency, and accountability. Corporate Governance has come to occupy a very prominent place on the agenda of business houses. Corporate management would do well to realize that it is not merely the appreciation of shareholders’ value which is the ultimate objective but the way it is achieved.
When it comes to insurance companies, the fiduciary responsibility of the management takes a two-pronged direction. As they deal with the policyholders’ money, insurers have to be cautious not just about their own management but also the way the companies where the funds are invested, conduct their business. Failure in achieving would amount the interest of the insurance company.
Insurance companies are surrounded by a complicated pattern of economic, social ideas and expectations. They have a responsibility to themselves, to one another and to their constituencies to make a reasonable and effective response. The Insurance is responsible for their day to day business. It must be a thoughtful institution, which rises above the bottom line to consider the impact of its actions on all, from shareholders to the society at large. All acts of the company should not only be the right course of action but also be perceived so. The means are as equal, if not more, important than the goals.
The insurance company has a fiduciary duty towards the stakeholders. The regulated body i.e IRDAI have issued the comprehensive Corporate Governance Guidelines in 2016 to confirm the good governance under insurance industry.
The IRDAI guideline has put the responsibility of good governance upon the board of the insurance company. IRDAI will oversee the maintenance of the guideline. The guideline is an addition to the Companies Act, 2013 and any other laws or regulations. If the requirements of these guidelines and other rules or guideline of other statute are conflicted than the stricter guideline shall be followed.