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Sector regulator issued corporate-governance guidelines for ensuring transparency and accountability in insurance business by way of keeping insurers on track and safeguarding policyholders' interests.
The Insurance Development and Regulatory Authority or IDRA issued the rules of business in insurance--one of key financial sectors-recently with the aims in view.
Insurers are required to form at least five committees each under provision of the guidelines to ensure good governance in the industry meant for securing interests of clients and also mobilizing capital.
The committees are audit committee, nomination and remuneration committee (NRC), investment committee, risk-management committee, policyholder protection, and compliance committee.
The main task of the NRC is to attract and retain skilled people in the insurance industry by offering rational remunerations.
This body will comprise at least one independent director and at least four directors. The chairperson of the company board is not eligible for being chairperson of the committee. He may be member of the NRC Committee, the guidelines say.
As provided in the rules, the NRC committee will sit at least twice a year.
The investment committee will be formed with five members. They will have access to many relevant data, documents, and reports for study on the investment. They will apprise the board about the monthly investment earnings.
"The investment committee may consult financial experts relating to investments," says the rules book.
The risk committee will comprise three members along with an independent director. They will appraise the board about risks, mergers and acquisitions, solvency margin, and so on.
The policyholder protection and compliance committee will consist of three members, including an independent director.
This panel is very important as it will deal with the claims disputes--a key problem for Bangladesh's insurance industry. They will study claim-servicing parameters, among others.
The insurers will prepare the annual corporate-governance report and submit it by December 31 each year to the Authority.
Under the rules the issuers will have to comply with a number of corporate- governance issues, for example, ESG (environmental, social governance) and social corporate issues.
The guidelines also stress proper appointment of senior management personnel, actuary, auditor, and relations with the stakeholders.
"The audit report, actuarial valuation report and contact numbers of board members and key personnel of the insurers should be given on their respective websites," the guidelines read.
Nasir Uddin Ahmed, first vice president of Bangladesh Insurance Association (BIA), told the FE that this is a requirement for reform under the World Bank-funded Bangladesh Insurance Development Programme (BSDP).
Mr Ahmed, also vice-chairman of Karnaphuli Insurance Company, said this would help address the compliance issues of the industry gradually. "We are now to be more compliant with the relevant issues mentioned in the guideline."
He points out that the banking sector has separate guidelines on such corporate-governance issues. Bangladesh Securities and Exchange Commission also has such a separate framework.