Long Term Insurance Act, 1998 (Act No. 52 of 1998)Board NoticesNotice on Governance and Risk Management Framework for Insurers, 2014Part 3 : Composition, Governance and Structure of the Board of DirectorsBoard of Directors4. Roles and responsibilities of board of directors |
| (1) | The board of directors is responsible for the effective governance and risk management of an insurer. |
| (2) | The board of directors of an insurer must— |
| (a) | determine and oversee the implementation of the insurer's business objectives and strategies for achieving those objectives, which objectives and strategies must be regularly reviewed to be consistent with the long-term interests and sustainability of the insurer and the interests of its policyholders; |
| (b) | ensure that the roles and responsibilities allocated to the board of directors, managing executives and heads of control functions are clearly defined so as to promote an appropriate separation of oversight function from management responsibilities; |
| (c) | ensure that there are adequate policies and procedures relating to the appointment, dismissal and succession of managing executives and heads of control functions; |
| (d) | provide oversight in respect of the design and implementation of sound risk management and internal control systems and functions; |
| (e) | adopt and oversee the effective implementation of all material policies of the insurer, including, but not limited to, the overall risk management policy and component policies referred to in section 11; |
| (f) | monitor compliance with its fit and proper policy to facilitate the sound and prudent management of the business of the insurer; |
| (g) | ensure reliable and transparent financial reporting for public and supervisory purposes; |
| (h) | ensure that systems and controls are in place to ensure the promotion of appropriate, timely and effective communications with the Authority on the governance framework of the insurer, which will allow the latter to make informed judgments about the effectiveness of the board of directors and managing executives in governing the insurer; |
| (i) | have appropriate policies and procedures to oversee that managing executives— |
| (i) | carry out the day-to-day operations of the insurer effectively and in accordance with the insurer's strategies, policies and procedures; |
| (ii) | promote a culture of sound risk management, compliance and policyholder protection; |
| (iii) | provide the board of directors with adequate and timely information to enable it to carry out its duties and functions, including the monitoring and review of the performance and risk exposures of the insurer, and the performance of managing executives; and |
| (iv) | provide the Authority and relevant stakeholders with the information required to satisfy the legal and other obligations applicable to the insurer; and |
| (j) | regularly monitor and evaluate the adequacy and effectiveness of the insurer's governance framework and notify the Authority of any shortcomings and the reasons therefor. |
(3)
| (a) | The board of directors may delegate some of the activities or tasks associated with its roles and responsibilities to a board committee, a senior manager or any other person within the insurer. |
| (b) | The board of directors of an insurer must develop an appropriate system of delegation, which delegation must— |
| (i) | be appropriately and clearly mandated; |
| (ii) | provide adequate checks and balances; |
| (iii) | provide for the monitoring and reporting on delegations; |
| (iv) | not allow for the undue concentration of powers; and |
| (v) | provide for the withdrawal of a delegation. |
| (c) | Anything done or omitted to be done under a delegation— |
| (i) | does not in any way abrogate the accountability of the board of directors; and |
| (ii) | is deemed to have been done or omitted by the board of directors. |