IRDA sets rules for corporate governance for insurers

NEW DELHIL: Insurance regulator IRDA is ready with the final guidelines on corporate governance for the sector focusing on key areas such as lock-in period for promoters, whistle blowing policy, governance structure and disclosures.

On lock-in period, the IRDA guidelines said promoters of insurance companies would have a lock-in period of 5 years, which the insurers have to report compliance by the next fiscal year.

"IRDA prescribes a minimum lock-in period of 5 years from the date of commencement of business for the promoters of the company and no transfer of shares of the promoters would be permitted within this period," the regulator said.

On 'whistle blowing', it said the insurers are to put in place a whistle blowing policy that would allow employees to raise concerns about possible irregularities, governance weaknesses, financial reporting issues, among others.

The appointed actuary and the statutory or internal auditors have the duty to 'whistle blow', IRDA said. The auditors have to report in a timely manner to IRDA if the insurer has failed to take appropriate steps to rectify a matter, which has a material adverse effect on its financial condition, it said.