A bylaw on corporate governance in insurers has been approved at a recent meeting of the High Council of Insurance, said media reports citing the head of Central Insurance of Iran (CII).
“After reforms in insurance industry structure and growth in the number of insurance companies, the implementation of corporate governance in insurance companies is necessary,” Dr Abdolnaser Hemmati, CII President, was quoted as saying.
Last July, Iran Insurance Research Centre, a think tank affiliated with the CII of Iran, was tasked with updating corporate governance standards among Iranian insurance firms, according to an article in Financial Tribune.
The lack of written regulations specifically addressing the structure of insurers had been mentioned in the past as the main barrier to implementing governance standards in the industry.
Dr Hemmati highlighted the need for a new supervisory system and regulations incorporating corporate governance standards to secure the insurance industry’s broad interests.
Until now, insurers followed the Trade Law and Insurance Law. Both laws are old, and fail to clearly define the roles and responsibilities of executives and board members.
Under the corporate governance bylaw, the executive staff of an insurer, including a CEO and deputies, need to be full-time employees of the company.
“Insurance companies need a board of five directors and most board members cannot hold executive positions in the insurance company; one of them should be an independent, non-executive, non-obligated member whose qualifications will be determined by CII,” said Dr Hemmati.
He emphasised that the board of directors is obliged to establish internal departments of audit and supervision, risk management and compliance under the CEO of the company. CII will have to approve the professional competence of the heads of these departments.
“Insurance companies must comply with corporate governance regulations within six months,” he added.
Insurance experts believe corporate governance should be accompanied by employing risk assessment experts who are currently not readily available in the local insurance market. M