Constitution of Committees :
The following Committees of Directors are mandatory for an insurance company:
(a) Investment Committee (formed under the Investment Regulations)
(b) Audit Committee
(c) Risk Management Committee
(d) Protection Committee
The non-mandatory Committees (optional) are Asset Liability Management Committee, Ethics Committee, Nomination Committee and Remuneration Committee. Investment Committee shall comprise of a minimum of 2 non executive directors, Chief Investment Officer, Chief Financial Officer and Appointed Actuary to oversee the performance of the Investment function of the Company. The Committee shall be responsible for laying down an overall investment policy and operational framework for the investment operations of the insurer. The investment policy and operational framework is recommended by the Committee to the Board for approval and is also responsible for a period review of the investment policy in line with the market changes.
Audit Committee is primarily responsible for periodic review of financial statements, atleast once in a quarter. Further the Committee is also responsible for overseeing the process controls. The Committee also oversees the performance of the internal audit function. Further the terms of appointment and remuneration of any statutory auditors and Concurrent auditors are reviewed by this Committee and recommended to the Board for approval. The Chairman of this Committee shall be an Independent Director and CEO shall not be a member of this Committee.
Risk Management Committee oversees the overall risk management function of the Company. The Chief Risk Officer of the Company shall be responsible for risk management and attends the meetings of the Committee. This committee reviews risk registers prepared by the concerned functions with the help of CRO and the status of action plans to mitigate the risks. Policyholders Protection Committee is responsible for overseeing the interests of Policyholders of the Company. Normally this Committee is headed by an independent director though not mandatory, since the Committee represents Policyholders interests. The general agenda items include review of Customer complaints and Claims performance of the Company. All mandatory committees shall meet 4 times in a year and not more than 4 months shall elapse between two meetings.
Asset Liability Management committee (optional) is responsible for reviewing the asset liability management position and strategy of the Company and advise the company appropriately. Since this is an optional committee, some insurance companies have included this item in Board Investment Committee or Risk management Committee. A Nomination Committee is responsible for evaluation of the candidates for the post of Chief Executive Officer or Managing director and certain other key position. A due diligence is done and their suitability for appointment is confirmed by this committee. The appointment is made by Board of Directors, subject to approval by IRDA. A Remuneration committee is responsible for recommending the remuneration for Chief Executive Officer or Managing Director for approval by the Board, subject to approval of IRDA. The responsibility of Ethics Committee includes monitoring compliance programs of the company, acting as a channel for whistleblower complaints, advising the effectiveness of the compliance structure etc. In some insurance companies, these functions are clubbed with the Audit Committee.