The Hindu Business Line : Prior approval for appointments must, IRDA reminds cos

New Delhi, Aug. 28 Insurance companies have been pulled up by the Insurance Regulatory and Development Authority (IRDA) for not seeking prior approval or giving it sufficient time to go through a due diligence process when it comes to appointments, re-appointments or terminations of chief executives, whole-time directors or managing directors.

“It is observed that insurers seek approvals without providing adequate time to examine such proposal and there are instances where approvals have been sought post facto.

We advise that the prior approval of the Authority is a statutory requirement and clearance would be subject to detailed due diligence conducted by the Authority,” a circular signed by Mr C. R. Muralidharan, member, IRDA, said.

The circular also says that companies need to apply to regulator for approvals at least 30 days to the commencement of appointment to allow sufficient time for the Authority to examine such proposals and accord approval.

“The idea of the circular was to basically regularise and streamline the process of appointments, re-appointments or terminations.

"It has been observed that companies were not complying with the section dealing with the appointments as prescribed under the Insurance Act (Section 34A), which states that no appointments can take place without the prior approval from the regulator,” a senior official in the IRDA told Business Line. The official, however, did not disclose the names of the companies but said that they include ones dealing in life and non life businesses.

The official added that companies have also been asked to furnish details such as copies of board resolutions, person’s educational background, remuneration details and permanent account number.

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Prior approval for appointments must, IRDA reminds cos