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28/05/2005 - OECD countries have approved new guidelines for insurers and pension funds to strengthen investor and customer confidence in the insurance industry and protect people’s pensions from mismanagement and fraud.
Recent scandals have revealed huge financial irregularities and highlighted the need for the insurance industry and its watchdogs to improve governance standards. The OECD calls on insurers to comply with existing regulations and urges them to put in place additional internal checks and balances to improve integrity and demonstrate a commitment to better business practices.
The 12-point Guidelines for Insurers’ Governance provide governments and the insurance industry with a roadmap to do this and thereby better protect policyholders and shareholders. They include specific proposals for:
- The structure and responsibilities of the board, with as its primary objective the protection of shareholders and policyholders.
- The integrity and accountability of board members, who should be legally responsible for their actions and decisions.
- Strict internal control and reporting systems, that take into consideration insurance specificities and complexities.
- The appointment of an independent, external auditor to certify an insurer’s accounts at least once a year and who has the power to alert regulators to irregularities or criminal violations. The role of the actuary is also confirmed as essential for the governance of insurers.
- Clear and timely disclosure to stakeholders (such as policyholders, shareholders and regulators) of a company’s financial position and exposure to the financial and technical risks facing insurers.
- Access to prompt redress through the courts or regulators or the setting up of alternatives such as internal dispute procedures and independent arbitrators.
Documentation
Recommendation on guidelines for insurers' governance
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