>> OECD Guidelines on Insurer Governance (pdf)
In May 2011, the OECD Council adopted revised OECD Guidelines on Insurer Governance. The revisions were based on a comprehensive review that included a joint work programme with the International Association of Insurance Supervisors (IAIS), an OECD review and assessment of evolving national and international principles and good practices, and public consultations in 2010.
The revised Guidelines seek to reflect lessons learned from the financial crisis, including the need for a board with necessary leadership, expertise, and independent decision-making, effective risk management and internal control systems and integrated firm-wide reporting within an insurer, sound compensation arrangements, and well understood group structures.
The revised Guidelines recognise that the governance of financial institutions, including insurers, should be of a high standard and are a key component of the regulatory and supervisory framework. Insurer corporate governance should, in particular, be comprised of the following key 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
- High level of financial expertise among board members and within senior management
- Policies and procedures that ensure proper treatment of customers and policyholders (and any relevant beneficiaries), including mechanisms for redress
The revised Guidelines benefited from joint work conducted with the International Association of Insurance Supervisors (IAIS), which included a global survey on insurer governance practices, the results of which were released in a summary report in March 2009; a roundtable held in December 2008 on the governance of insurers; and a joint Issues Paper on Corporate Governance released in July 2009.
The Guidelines are organised around four main sections -- governance structure, internal governance mechanisms, groups and conglomerates, and stakeholder protection – and are accompanied by detailed annotations. They are structured in such a way as to promote clear presentation and comparability with other national or international standards and principles.
The Guidelines are non-binding. They are meant to provide guidance and serve as a reference point for insurers, governmental authorities, and other relevant stakeholders in OECD and non-OECD countries. The Guidelines are fully consistent and compatible with the OECD Principles of Corporate Governance, one of the twelve key Financial Stability Board standards for sound financial systems.
Mr. Timothy Bishop (OECD Financial Affairs Division, email@example.com)