EghtesadOnline: The bylaw on insurance corporate governance was approved during the latest meeting of High Council of Insurance, the head of Central Insurance of Iran announced.
“After executing reforms in insurance industry structure and growth in the number of insurance companies, the implementation of corporate governance in insurance companies is necessary,” Abdolnasser Hemmati was also quoted as saying by Banker.ir.
Earlier in July, Iran Insurance Research Center, a think-tank affiliated with the Central Insurance of Iran, was tasked with devising a set of measures to update corporate governance standards among Iranian insurance firms.
Lack of written regulations specifically addressing the structure of insurance companies had been mentioned in the past as the main barrier to implementing governance standards in the industry, Financial Tribune reported.
The CII president highlighted the need for setting up a new supervisory system and regulations in compliance with corporate governance to secure the insurance industry’s broad interests.
Up until now, insurers followed the Trade Law and Insurance Law. Both are old and fail to clearly define the roles and responsibilities of executives and board members.
As the insurance industry’s top regulator noted, a board of directors and executive staff, whose responsibilities and authority are determined in CII’s statute, oversee the operations of insurance companies.
“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,” Hemmati said.
He also elaborated on the executive staff, noting that it includes a CEO and deputies who need to be full-time employees of the company.
Hemmati emphasized 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 and CII needs to approve the professional competence of the head 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 not readily available in the local insurance market.