PFS Corporate Governance Guidelines for Insurance Companies

Corporate governance defines organizational roles and responsibilities of an enterprise. It generally encompasses five areas: corporate culture and environment, corporate structure, governing policies, controls and procedures and decision-making. The framework clarifies who possesses the duty and legal power to act on behalf of a company and sets requirements for documenting decisions and disclosure to stakeholders. An effective structure should allocate oversight and administrative responsibilities; delineate clearly the duties and qualifications of persons having responsibilities; and protect the rights of shareholders and the interests of policyholders.

In the insurance sector, corporate governance encompasses in particular the following elements:

• expected prudent approach to business and financial strategies, consistent with the role of insurance in the economy and, where relevant, social security systems;
• well - developed risk culture and risk management and internal control systems, supported by effective and independent control functions;
• a high level of financial expertise among board members and within senior management;
• policies and procedures that ensure proper treatment of customers and policyholders.

This Guideline is intended to provide a basis for strengthening insurer corporate governance practices in [name of country].  It is meant to serve as a supplement to the  [title of insurance law and/or companies law] by providing guidance to insurers’  [boards of directors/supervisory boards] and senior management regarding the effective implementation of the legal provisions. Insurers are expected to adhere to the principles set forth in this Guideline, and the [supervisory authority] will monitor such adherence through its onsite inspection and offsite supervisory functions.

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