KATHMANDU, AUG 20, 2012
Insurance regulator has forbidden anyone to hold the position of a director in more than one insurance company, along with capping the remuneration of the chief executives of insurance companies.
In its bid to strengthen corporate governance of insurance companies, the insurance regulator –– Insurance Board (IB) –– has brought Insurance Corporate Governance Regulation 2069, that has specified the roles of directors and chief executives along with their remunerations. The regulations for corporate governance are based on the guidelines fixed by International Association of Insurance Supervisors.
According to the regulation, a director is not only forbidden to hold a position in another insurance company but any member of his family is also prohibited to be a board member.
The provision is going to create quite a stir in the boards of some insurance companies as some directors and their family members are holding positions in different insurance companies. For example, PrimeLife Insurance and Everest Insurance are both promoted by Khetan Group and have Rajendra Khetan as their chairman.
Moreover, the regulation has also forbidden companies to keep deposits at financial institutions and co-operatives that have the involvement of their directors. The board has provided a one-year time to shift such deposits.
According to regulation, the salary, allowances and incentives being given to chief executives should not be more than 15 times the amount being received by the lowest level employee of the company. The board has provided a six-month period for the companies to bring down the salaries and incentives of the chief executives within the limit if they are above.
Even directors have been fixed a maximum of Rs 5,000 as allowance for each meeting and chairman can receive up to Rs 6,000 per meeting as allowance. The regulator has become more stringent in recent times about making sure that the insurance companies are in tow with laws. It has already taken action against four insurance companies for committing financial irregularities arising from bad corporate governance.
IB found directors and management involved in unlawfully paying claims of directors and their families. It has even forbidden firms to issue policies to directors and their families and surveyors as well, to avoid such a situation. There are 16 non-life insurance firms and eight life insurance firms while Rastriya Beema Sansthan can sell both life and non-life insurance policies.
Source: THT
Insurance regulator has forbidden anyone to hold the position of a director in more than one insurance company, along with capping the remuneration of the chief executives of insurance companies.
In its bid to strengthen corporate governance of insurance companies, the insurance regulator –– Insurance Board (IB) –– has brought Insurance Corporate Governance Regulation 2069, that has specified the roles of directors and chief executives along with their remunerations. The regulations for corporate governance are based on the guidelines fixed by International Association of Insurance Supervisors.
According to the regulation, a director is not only forbidden to hold a position in another insurance company but any member of his family is also prohibited to be a board member.
The provision is going to create quite a stir in the boards of some insurance companies as some directors and their family members are holding positions in different insurance companies. For example, PrimeLife Insurance and Everest Insurance are both promoted by Khetan Group and have Rajendra Khetan as their chairman.
Moreover, the regulation has also forbidden companies to keep deposits at financial institutions and co-operatives that have the involvement of their directors. The board has provided a one-year time to shift such deposits.
According to regulation, the salary, allowances and incentives being given to chief executives should not be more than 15 times the amount being received by the lowest level employee of the company. The board has provided a six-month period for the companies to bring down the salaries and incentives of the chief executives within the limit if they are above.
Even directors have been fixed a maximum of Rs 5,000 as allowance for each meeting and chairman can receive up to Rs 6,000 per meeting as allowance. The regulator has become more stringent in recent times about making sure that the insurance companies are in tow with laws. It has already taken action against four insurance companies for committing financial irregularities arising from bad corporate governance.
IB found directors and management involved in unlawfully paying claims of directors and their families. It has even forbidden firms to issue policies to directors and their families and surveyors as well, to avoid such a situation. There are 16 non-life insurance firms and eight life insurance firms while Rastriya Beema Sansthan can sell both life and non-life insurance policies.
Source: THT
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