The Hindu Business Line : Insurers asked to put in place a ‘whistle blowing’ policy

Hyderabad, Aug. 6 The Insurance Regulatory and Development Authority (IRDA) has asked insurers to put in place a ‘whistle blowing’ policy to help employees raise concern internally about possible irregularities.

The nature of irregularities could be weaknesses in corporate governance, financial reporting issues or any other vital matter, the regulator said in a new set of guidelines on corporate governance communicated to the CEOs of insurance companies.

An employee should be able to report in confidence directly to the chairman of the board or a committee of the board or to the external auditor, it said.

“The appointed actuary and the statutory/internal auditors have the duty to whistle-blow – to report in a timely manner to IRDA if they are aware that the insurer has failed to take appropriate steps to rectify a matter which has a material adverse effect on its financial condition,” it said.

Such a step would enable the IRDA take prompt action before policyholder’s interests are undermined, it added.

On the governance structure, it advised that insurance companies, that are not yet listed, should familiarise themselves with the corporate governance structures and requirements appropriate to listed entities.

“They should initiate necessary steps to address the extant “gaps” that are so identified to facilitate smooth transition at the time of their eventual listing,” it observed.

The size of the board, in addition to being compliant with legal requirements, should be consistent with the scale, nature and complexity of business.

The board of directors and senior management must understand the operational structure and have a general understanding of the lines of business and products of the insurer, it added.

The guidelines, which have also been hosted on IRDA’s portal, also touched upon some other aspects pertaining to disclosures, outsourcing and relationship with the stakeholders, among others.

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