AISAM-Comment Template IAIS- Draft Recommendations on Corporate Governance final

Helen

Description

Member and Observer Comments on IAIS Draft Paper Recommendations on Corporate Governance (Comments due by 31 August 2007) 1Name Paragraph Comment Resolution reference AISAM General AISAM would like to thank IAIS for being given the opportunity tocomment on its draft recommendations on Corporate Governance.Its members take very seriously all the work done by IAIS in thisfield as IAIS recommendation very often result in local legislationsometimes very soon after their issuance.. We would like to applaud the general quality of the documentwhich refers to general and high level standards of corporategovernance for insurers. We note that mutuals’ characteristics in terms of, for example, specific stakeholders, have been taken into account. Therefore we hope that the Governance and Compliance Subcommittee which will succeed the current Task Force will work along the same lines, and we would like to stress our interest in remaining active in the subcommittee as an observer as we want to make sure that the concepts or principles are formulated in such a way as not to jeopardize the level playing field between insurance actors of different countries. AISAM Recommendations, We broadly agree with these conclusions but would at the same 16-17 time want to ensure that ‘some of the elements are not mandatory (for example advanced criteria) or not phrased as a requirement the supervisor needs to impose’ is in line with IAIS’ mandate. AISAM ...

Informations

• Publié par: Soof
• Nombre de lectures: 13
• Langue: English

Extrait

Member and Observer Comments on IAIS Draft Paper

Recommendations on Corporate Governance

(Comments due by 31 August 2007)

Name

Paragraph

reference

Comment

1

Resolution

AISAM

General

AISAM would like to thank IAIS for being given the opportunity to

comment on its draft recommendations on Corporate Governance.

Its members take very seriously all the work done by IAIS in this

field as IAIS recommendation very often result in local legislation

sometimes very soon after their issuance..

We would like to applaud the general quality of the document

which refers to general and high level standards of corporate

governance for insurers. We note that mutuals’ characteristics in

terms of, for example, specific stakeholders, have been taken into

account.

Therefore we hope that the Governance and Compliance

Subcommittee which will succeed the current Task Force will work

along the same lines, and we would like to stress our interest in

remaining active in the subcommittee as an observer as we want

to make sure that the concepts or principles are formulated in such

a way as not to jeopardize the level playing field between

insurance actors of different countries.

AISAM

Recommendations,

16-17

We broadly agree with these conclusions but would at the same

time want to ensure that ‘some of the elements are not mandatory

(for example advanced criteria) or not phrased as a requirement

the supervisor needs to impose’ is in line with IAIS’ mandate.

AISAM

Recommendations,

19

The key challenge is to ensure that any glossary term is written so

that it can be applied, when relevant, to all insurers, mutuals and

joint stock.

This could be done by ensuring that any explanation

that needs to be tweaked to apply to mutuals (e.g. because it

refers to shareholders) is specifically picked up at that point with an

explanation as to how this relates to the mutual world.

AISAM

Appendix 8

Each insurer must have the liberty to decide whether to establish

such separate committees or not. The solutions depend on the

different organisation models of each insurer.

AISAM

Appendix 9

The way the recommendation “Mutual insurers should have

particular regard for the need to be accountable to members and to

ensure they are adequately represented on the board of directors”

is formulated sounds negative. In a mutual, the Board of directors

and/or its Supervisory Board is chosen to represent its members.

Indeed, one of the specific characteristics of a mutual is that all or

the majority of Board members must be members of the mutual.

Therefore, the members are adequately represented. By

underlining the point (that mutuals have to ensure that members

are adequately represented on the Board) IAIS seems to suggest

that this is not the case in most mutuals.

We suggest that the sentence be reformulated in such a way that it

makes sure that processes exist in order to guarantee that the

Board (Board of Directors and/or Supervisory Board) represents all

categories

of

stakeholders

whether

they

be

members,

policyholders or shareholders. In that case, each mutual must be

1

Please provide comments of a more critical nature on scope and content,

together with alternate drafting suggestions

free to decide about the representation of the members in the

Board of directors as this can be done in many ways:

For example, the statutes should define how the membership must

be represented in the different structures of the mutual companies.

AISAM

Appendix 13

"senior management is appointed and dismissed by the board of

directors". In some countries this is a prerogative of the general

manager. For example, in France it is only the "Directeur General"

who is appointed and dismissed by the Board, not all the senior

management in a broad way. It is the responsibility of the Directeur

General in France to appoint and dismiss his or her senior staff.

We would like to make sure that no confusion is possible, nor that

the principle reduces the operational powers of the general

manager.

AISAM

Appendix 19

It is important that the qualification requirements of the Board

Members should be emphasized; fit and proper, sound and

prudent etc. to make sure that the collective requirements for

independence

do

not

surpass

the

essential

quality

skills requirement of a board membership.

AISAM

Title, Appendixes

27-30

Please delete the title “Incompatibilities and conflicts of interest” as

these are two separate points

AISAM

Appendix 29

This recommendation should not prevent insurance Board

Members from being member of the Board of two different

insurance companies: it is very obvious today that some members

of the Board of some (mutual) insurers are also members of the

Board in another insurance company or another mutual. This is

particularly relevant if we take into account that it is not always

easy to find reliable and competent Board members and some of

them might therefore sit on the Board of two different companies.

In addition if you consider the creation of the mutual group, as is

the case for example in France, or financial conglomerates, it is

natural that some Board Members will hold the position of Board

Member in different legal structures of the same group. In the case

of France, the regulation has defined a maximum number of

mandates per person, and the mutual insurance sector has also

created a voluntary Charter, a code of good conduct, and internal

regulations to make sure that any potential conflict is solved

correctly.

In conclusion, we would like to suggest that the recommendation is

formulated in such a way to leave more possibilities to the mutual

insurers to organize themselves.

We suggest clarifying the formulation: Members of the board of

directors and senior managers should not simultaneously hold two

positions in the same insurance undertaking where this could result

in a material conflict.

AISAM

Appendix 31

The remark concerning the remuneration policy and incentives

regarding imprudent behaviour is too extendable. We need clear

defined conditions or areas in the business where it is forbidden to

work with incentives or performance guidelines.

AISAM

Appendix 35

We would like to avoid this statement being transformed at a

national level into an obligation for mutual insurers to provide all

their members with their audited financial statements at great

expense. Therefore, we would suggest adding: via the appropriate

channels used in their jurisdiction. This would allow for electronic

distribution or distribution via a public database or website.

AISAM

Appendix 38

We do not understand why the recommendations are different

between Life and Non-life Actuaries. Maybe what is intended is

that at least life insurers should nominate an actuary. The point is

mixing up appointment with reporting lines. In case of actuaries,

whether life or non-life, their reporting lines should be the same.

AISAM

Appendix 39

This recommendation refers potentially only to the actuary-

employee but seems difficult to enact.. If the actuary is an

employee of the insurer, he or she

is therefore obliged to follow

the instructions from his or her employer. The question of

independence is important for the external auditor and not for the

actuary.

Independence seems to be defined here a contrario from having a

material conflict (without however explaining this any further).

Furthermore,

AISAM

Appendix 41-454

The actuary has his own job; he is not employed by the insurance

supervisory authority. For example, in Switzerland the legislation is

clear: the actuary has to report directly to the Management. His

report is thereafter part of the annual reporting from the

management to the Board.

We would like that ‘direct access’ is clarified.

Appendix 43

The supervisor can as general principle always demand reports

from the insurer. Therefore it makes no sense to define this rule

explicitly for the actuarial report.

We also would like to understand what is meant by all reports by

the actuary.

AISAM

Appendix 48

The recommendation made to rotate on a periodic basis insurance

audit partners should not result at a national level in an obligation

to change its auditors every XX years in a compulsory manner.

Small and medium size mutuals, in a region for example, like to

work with auditors that usually have been working for them for

many years and know them very well. Especially outside the large

business centres, it could be difficult to find efficient alternative

insurance audit partners.

AISAM

Appendix 55

“The supervisor should have the power to provide guidance on

sound corporate governance for insurers": we strongly oppose the

idea that the supervisor becomes the regulator, which is in

complete contradiction with the role of supervision and control.

Creating rules and controlling their application should not belong to

the same body. One cannot be judge and judged at the same time.

This is not in line with sound governance principles.

AISAM

Appendix 56

In our opinion the supervisor should have more concrete conditions

under which it may act and the kind of measures the supervisor

can take should be specified.

AISAM

Appendix 62

We agree that the supervisor should inform the company in a

timely manner of any problems before taking any other action.