Set definitions for key positions in the insurance companies are introduced (e.g. executives; managers; directors; and executive directors).

Further, definitions relating to the independence of directors (e.g. parent company; group companies; related persons; and controlling person) are clarified.

Any insurance company must have a written good corporate governance framework (the “Framework“), which is approved by its board of directors and reviewed by the OIC. The Framework must include the company’s policies and strategies on checks and balances, as well as supervisory systems.

The Framework must be submitted to the OIC within 30 days of the CG Notifications coming into force. Following which, any amendments to the Framework that have been approved by the company’s board of directors, must be submitted to the OIC within a one month period.

Insurance companies must determine the corporate structure, composition, and the appropriate number of directors with consideration for the nature, size, and complexity of the companies; proper checks and balances; the directors’ ability to work together; and compliance with life insurance and public company limited laws.

The board of directors of insurance companies must possess sufficient knowledge, abilities, experience; understanding of personal qualifications, duties, and responsibilities; as well as have a range of experience or skills that suit the nature, size, complexity, and risk of the companies.

The company’s board of directors must consist of:

(1)    executive directors (not exceeding one-third of all directors); and

(2)    independent directors (not exceeding one-fourth of all directors).

The chair of the board of directors must be either an independent director or non-executive director, unless an approval is granted by the OIC on a case-by-case basis.

Independent directors must have the qualifications as prescribed in the CG Notifications.

In addition, to the board of directors’ general responsibilities of ensuring good systems and frameworks within the company, the following key duties and responsibilities are also imposed:

(1)    determine strategies and policies at least on (i) business operations, (ii) conflict of interest, (iii) whistleblowing, (iv) compensation, and (v) code of ethics and business conduct;

(2)    ensure that efficient mechanisms are put in place to monitor and inspect at least (i) internal functions, (ii) a risk management and internal control, (iii) sub-committees appointments (iv) company’s audit, (v) annual board of directors performance evaluation, (vi) public disclosure, and (vii) financial reports; and

(3)    constantly monitor the company’s operation under certain criteria.

Directors must observe the following roles and responsibilities:

(1)    comply with insurance and related laws;

(2)    act in the best interest of the company and the insured, with honesty and prudence; and

(3)    attend meetings regularly and give independent opinions, with respect to their fiduciary duties.

Executives are to perform their duties by adopting the strategies and policies issued by the board of directors. In addition, they are also required to:

(1)    have regard for the sustainability of the company’s business operations;

(2)    promote the implementation of risk management and internal control systems, and fair treatment of the insured;

(3)    timely report to the board of directors so that their performances may be monitored and evaluated;

(4)    ensure that there is an appropriate chain of command, as well as risk management, regulation, control, and inspection for each chain;

(5)    communicate the board of directors’ policies on risk management to other personnel;

(6)    perform annual assessment of the executives; and

(7)    act within the scope of their duties, unless the board of directors has considered that any out-of-scope performances would not affect their efficiency.