The insurance regulatory and development authority of india(irdai) has notified appointment or continuation of common director(s) u/s 48a of insurance act 1938.
The second one proviso of section 48a of the insurance act, 1938 affords that “the Authority may permit an agent or intermediary or insurance intermediary to be on the Board of an insurance company subject to such conditions or restrictions as it may impose to protect the interest of policyholders or to avoid conflict of interest.”
applications for new appointments or renewals of common directotr who constitute insurance retailers, intermediaries, or intermediaries at the board of insurance agencies are submitted to the authority for approval in accordance with phase 48a of the insurance act of 1938.
The authority, in exercise of powers conferred below phase 14(1) of the irda act, 1999 hereby gives the following framework for appointment of common director beneath section 48a of the insurance act, 1938:
A. The appointment or continuation of common director representing insurance agent, middleman or coverage intermediary on the board of coverage enterprise will be deemed to were accepted, unless in any other case supplied for on this round, difficulty to following situations:
i. While serving as a director for the insurance firm, the proposed director shall not serve as the Chief Insurance Executive / Specified Person or any other officer in charge of soliciting insurance business for or on behalf of the insurance agent, intermediary, or insurance intermediary.
Ii. Due to this appointment, there ought to be no battle of interest or prejudice against the policyholders‘ interests.
Iii. With out the authority’s previous consent, the insurer might not pay non-executive director any compensation. But, insurers are allowed to pay sitting expenses according with the applicable rules.
Iv. The disclosure requirements outlined within the irda (Preparation of Financial Statement and Auditor’s Report of Insurance Companies) regulations, 2002, the company governance suggestions for insurers in india, and every other applicable laws presently in effect have to be followed.
V. A resolution is passed approving such appointment through the board of coverage organisation/agent/middleman/insurance middleman.
Vi. The common director shall recuse himself/herself from the discussion and balloting on any matter/dialogue referring to:
1. Any area having potential conflict of interest;
2. Insurer/ agent/ middleman/ coverage middleman wherein she/ he’s holding common directorship.
Vii. The maximum no. of directorships allowed by way of new regulation, consisting of the corporations act of 2013, cannot be surpassed at any second in time by using a common director.
Viii. The insurer/ agent/ middleman/ insurance middleman shall comply with all other relevant laws.
B. No person may be nominated as a nominee or commonplace director if they may be already serving or are being taken into consideration for serving as executive director or entire-time director at the board of the insurer, agent, middleman, or coverage middleman.
C. The appointment of the common director as chairperson of the board of the coverage corporation, agent, middleman, or intermediary may be made problem to the status quo of all essential safeguards to shield policyholder pastimes and prevent any capability conflicts of hobby that could result from such an appointment.
The insurers shall report a certificate on an annual basis, duly certified through the ceo, confirming compliance with the provisions of this round on monetary yr foundation. The compliance shall be filed with authority now not later than 30th april of the succeeding financial year.
This Circular will come into force from the date of issuance of the same and will supersede the Circular IRDA/F&A/CIR/MISC/141/08/2018 dated 30.08.2018.