Insurance Board sets two-term limit for board members of insurers

The regulatory authority of the insurance sector barred the board members of insurance companies from assuming the position for more than two terms.

Revising a directive on the ‘institutional corporate governance’ of the insurers, the Insurance Board (IB) has enforced the new provision.

A single term of a board member has been fixed at four years, which means a board member cannot assume his position more than 8 years.

Likewise, individual board members cannot purchase shares and debentures issued by the insurance companies, where he or she is a board member, the new amendment reads, adding that they cannot even be involved in the transaction of the company’s shares and debentures for up to one year after the termination of their contracts.

Insurers will have to assess the effectiveness of their annual plans and policies on a quarterly basis,  it reads, adding that the companies will also have to conduct the due diligence audit every five years and report the regulator within a fixed time period.