The Securities and Exchange Commission of Pakistan (SECP) has approved the promulgation of the Code of Corporate Governance for Insurers, 2016, after consulting stakeholders vide SRO 1096(I)/2015 dated November 9, 2015. On February 24, 2016, the SECP approved the promulgation of the code. Its draft was published on November 9, 2015 for the information of all persons likely to be affected by it. They were given 30 days to file objections, suggestions and comments.
The purpose of formulation of a comprehensive corporate governance framework is to improve the governance of the insurance companies keeping in view the best international practices in the insurance sector. This would also help maximise protection of the interests of the insurance policyholders and enhance confidence of the public in insurance companies. The framework has been devised in such a manner so as to cater to both the general governance aspects as well as insurance specific ones.
The insurance specific provisions have been taken from the Insurance Core Principles laid down by the International Association of Insurance Supervisors (IAIS). In the existing form, the corporate governance framework shall require all insurers to form balanced and diversified boards, including the presence of independent directors on their boards. The insurers shall also be required to have a dedicated grievance function to address the policyholders' complaints and grievances within 30 days. Additionally, risk management and investment have been one of the main areas addressed in the framework. The insurers shall be required to constitute committees for all of its core functions. Moreover, certain restrictions have also been laid down concerning key management personnel to ensure independence of the decisions they may take by virtue of the positions they hold.
It is believed that with the promulgation of the final Code of Corporate Governance for Insurers, the confidence of the investors as well as the public at large will increase, which shall contribute to better insurance penetration levels in Pakistan.-PR