Long Term Insurance Act, 1998 (Act No. 52 of 1998)Board NoticesNotice on Governance and Risk Management Framework for Insurers, 2014Part 5 : Internal Control System28. Head of control function |
(1)
| (a) | An insurer, subject to paragraphs (b) and (c), must appoint a head for each of the control functions referred to in section 23(1), in respect of which no exemption was granted under section 23(2). |
| (b) | The appointment, performance assessment, remuneration, disciplining and dismissal of the head of each control function (other than the head of the internal audit function) must be done with the approval of, or after consultation with, the board of directors or relevant board committee. |
| (c) | The appointment, annual or other periodic performance assessment and dismissal of the head of the internal audit function, and his or her remuneration, promotions, demotions or disciplinary actions must be done by the board of directors, its chairperson or the audit committee. |
(2)
| (a) | An insurer may, where appropriate in light of the nature, scale and complexity of the insurer's business and risks, appoint— |
| (i) | a person as the head of more than one control function (other than the head of the internal audit function); or |
| (ii) | the statutory actuary as the head of the actuarial function, if that appointment provides that the statutory actuary may not conduct any activities for the insurer which would compromise the independence and oversight requirements of the role of the actuarial function. |
| (b) | An insurer may not outsource the head of control function in respect of the risk management function or the compliance function, without the approval of the Authority. |
| (3) | Despite subsection (2), the Authority may direct the insurer to appoint another or a dedicated person as the head of that control function, if the Authority is of the opinion that— |
| (a) | that person is not a suitable head for more than one control function; or |
| (b) | the appointment of that person as the head of more than one control function will detract from an adequate control environment and risk management system, taking into account the nature, scale and complexity of the business of the insurer and the risks to which it is exposed; or |
| (c) | the appointment of the statutory actuary as the head of the actuarial function will detract from an adequate control environment and risk management system, taking into account the nature, scale and complexity of the business of the insurer and the risks to which it is exposed. |
| (4) | The head of each control function must— |
| (a) | regularly report to the board of directors or a committee of the board identified by the board of directors; |
| (b) | communicate directly and regularly meet (without the presence of managing executives) with the chairperson of the board of directors or the committee of the board identified by the board of directors. |
| (5) | The head of a control function must— |
| (a) | report in writing to the board of directors any matter relating to the business of the insurer of which the head becomes aware in the performance of the functions and which, in the head's opinion, constitutes a contravention of any section of the Act or a material contravention of any other legislation that applies to the insurer, which report must— |
| (i) | in the case of any material contravention of the Act, be made without delay; and |
| (ii) | in any other case, be made at the first meeting of the board of directors following the contravention; and |
| (b) | where the matter relates to a contravention of the Act, submit the report referred to in paragraph (a), without delay to the Authority if, in the opinion of the head, appropriate steps to rectify the matter are not taken by the board of directors to the satisfaction of the head within 30 days after the date in which the report was made to the board of directors. |