Long Term Insurance Act, 1998 (Act No. 52 of 1998)

Board Notices

Notice on Governance and Risk Management Framework for Insurers, 2014

Part 4 : Risk Management System

13. Remuneration policy

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(1)	For purposes of this section, the term "remuneration" has the meaning as defined in section 30(6) of the Companies Act.

(2)	An insurer's remuneration policy must—

(a)	not induce excessive or inappropriate risk taking and be consistent with the long-term interests of the insurer and the interests of its policyholders;

(b)	at a minimum, address the remuneration of directors, managing executives, heads of control functions and other persons whose actions may have a material impact on the risk exposure of the insurer (including persons to whom functions are outsourced);

(c)	be consistent with the insurer's business and risk management strategy (including the insurer's risk management practices), and performance;

(d)	apply to the insurer as a whole in a proportionate and risk-based way and contain specific arrangements that take into account the respective roles of persons referred to in paragraph (b);

(e)	provide for a clear, transparent and effective governance structure around remuneration, and the oversight of the policy;

(f)	when remuneration includes both fixed and variable components, provide that—

(i)	the fixed portion represents a sufficiently high portion of the total remuneration to avoid over dependence on the variable components;

(ii)	the variable component is based on a combination of the assessment of the individual and the collective performance, such as the performance of the business area and the overall results of the insurer; and

(iii)

the payment of the major part of a significant bonus, irrespective of the form in which it is to be paid, contains a flexible, deferred component that considers the nature and time horizon of the insurer's business; and

(g)	ensure that in defining an individual's performance, that financial and non-financial performance are considered.