The Insurance Regulatory and Development Authority of India (IRDAI) on September 02, 2022, issued a circular regarding the appointment or continuation of the common directors under section 48A of the Insurance Act, 1938.
The following framework for the appointment of a common director under section 48A of the Insurance Act, 1938 are as stated:
• The proposed director shall not be working in the capacity of the Chief Insurance Executive / Specified Person or any other officer responsible for soliciting insurance business for or on behalf of the insurance agent, intermediary or insurance intermediary while holding the position of director in the insurance company.
• There should be no conflict of interest or prejudice against the interest of the policyholders as a result of such appointment.
• Insurer shall not pay any remuneration to non-executive directors without prior approval of the Authority. However, insurers are permitted to pay sitting fees, as per applicable norms.
• The disclosure requirement as laid down under the Corporate Governance Guidelines for Insurers in India, IRDA (Preparation of Financial Statement and Auditor’s Report of Insurance Companies) Regulations, 2002 and any other extant applicable laws shall be complied with.
• A resolution is passed approving such appointment by the Board of insurance company/agent/intermediary/insurance intermediary.
• The common director shall recuse himself/herself from the discussion and voting on any matter/discussion pertaining to any area having potential conflict of interest or Insurer/Agent/Intermediary/Insurance intermediary where she/he is holding common directorship.
• The number of directorships held by the common director shall not exceed, at any point of time, the maximum number of directorships specified under the extant law including the Companies Act, 2013.
• The Insurer/Agent/Intermediary/Insurance intermediary shall comply with all other applicable laws.
This circular will come into force with immediate effect and will replace the Circular IRDA/F&A/CIR/MISC/141/08/2018 dated August 30, 2018.
[Circular No. IRDAI/F&I/CIR/MISC/183/9/2022]
