Insurance and reinsurance companies have been subject to the Central Bank of Ireland’s Corporate Governance Code since 1 January 2011. Most companies’ preparations are well under way and the six month transitional period has been useful in allowing companies to make the changes necessary to comply with the Code.
There have been requests for clarification on various aspects of the Code. While the Central Bank has been dealing directly with companies when they raise a query, the Central Bank has also committed to collating the queries it has received and issuing a “Frequently Asked Questions” document. It is expected that the Central Bank will issue this FAQ document shortly.
Clarifications Already Provided
The Central Bank has already clarified a number of points relevant to the insurance and reinsurance industries. The following are examples of those clarifications:
- Companies that sell payment protection insurance will not be required to have separate CEOs for their life and non-life operations
- Attendance at board meetings will ideally be personal attendance. The Central Bank has, however, acknowledged that conferencing (i.e. non-physical attendance) may be acceptable in certain circumstances
- Directorships held in captive insurance companies will be regarded as “non financial directorships” directorships for the purposes of the Code
- Where the Chairman or CEO of an international group wishes to hold the same position in the Irish entity, the Central Bank will need to be satisfied that the individual is able to focus properly on their role in the Irish company
- If a company’s status changes to a “Major Institution” then that company will be allowed a transitional period in order to implement the changes
- Guidelines on compliance statements will be issued in June, with the first compliance statement being necessary for a company’s financial statements that are produced in respect of 2011 or a part thereof
Other Central Bank Papers
In the connected area of fitness and probity, the Central Bank issued a paper on 22 March. This paper is available on the Central Bank’s website.
It is also expected that a Central Bank paper on remuneration practices will issue shortly.
Contributed by John Larkin and Grant Murtagh.