Exposure Draft on IRDAI (Conflict of Interest) Guidelines, 2019

Mar 11, 2019 | by Avantis RegTech Legal Research Team

The Insurance Regulatory and Development Authority of India (IRDAI) on March 03, 2019, proposes to issue a Draft on IRDAI (Conflict of Interest) Guidelines, 2019 in order to address conflicts of interest arising out of the appointment of common directors between insurance companies, insurance company and insurance intermediaries and common promoters of Health and General Insurers.

The Guidelines are:

•The application for issuance of requisition of registration of certificate duly approved by Board of Directors must be filed by a promoter of a general insurance company who wants to be a promoter of a health insurance company or vice versa.

•It is the responsibility of the Board of Directors of the Insurance Companies to formulate policy to address conflict of interest situations that may arise due to common directors or Officers.

•A director or officer within thirty days after he or she becomes aware that a material conflict of interest exists should eliminate the conflict of interest or resign from office.

•Insurer should take an immediate action against the Director or Officer in case of Conflict of Interest situation. An enquiry headed by an independent director should be conducted against the Director or Officer. The powers or authority delegated to such officer should be ceased and he or she will not be allowed to participate in day to day activities of the company.

•No permission is required where the person proposed to act as the common director is an independent director in both the companies under the same group and the remuneration payable to such a Director does not exceed rupees ten lakhs per annum.

•Permission for common non-executive director of an insurance company and insurance intermediary is required where the insurance company and insurance intermediary are part of the same group.

•An insurance company and insurance intermediary which are not part of the same group, cannot have a common director.

•A common directorships amongst insurance companies, an insurance company and its promoter company, and insurance companies and insurance intermediaries are allowed subject to conditions stated in the guidelines.

IRDAI invites comments or suggestions on the proposed Guidelines by March 29, 2019. The Comments or suggestions may be e-mailed to Mr. Nirmal Jain, AM at [email protected] with a copy to the undersigned at [email protected] .

[Reference No. 228/F&A(NL)/COI-DIR/01/2018-19]

Click here to download the Draft.


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