IRDAI Introduces New Corporate Governance Guidelines for Insurers

The Insurance Regulatory and Development Authority of India (IRDAI) has issued a master circular outlining new operational and procedural guidelines for insurers. Effective immediately, insurance companies must seek prior approval for appointing their Board Chairperson, with current chairpersons required to comply by March 31, 2026, or at the end of their term, whichever is sooner.

The “Master Circular on Corporate Governance for Insurers, 2024” applies to all insurers except foreign reinsurance branches in India. Although the circular is effective upon issuance, insurers have until June 30, 2024, to comply with its provisions. Specific timelines for certain compliances remain unchanged.

This new framework aims to enhance governance by ensuring Boards and key stakeholders manage businesses prudently. It mandates an optimal mix of Independent and Non-Executive Directors, with at least three Independent Directors. Board meetings require a quorum of one-third of the Board’s total strength or three Directors, whichever is higher.

The circular emphasises that Boards must consist of competent and qualified Directors to drive strategies that sustain growth and protect stakeholders’ interests, particularly policyholders. Additionally, insurers must implement a whistleblower policy, allowing employees to report concerns about irregularities, governance issues, or financial problems confidentially to the Board Chairperson, a Board Committee, or the Statutory Auditor.

The IRDAI circular instructs insurers to disclose the number of insurance claims that are both outstanding and resolved.