Insurers:

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It goes without saying that the insurers are the first and foremost party to be interested in good corporate governance practices in the insurance companies. Hence, it is the responsibility of the regulators to impose the governance practices on insurers and it is the duty of the insurers to adhere to the principles strictly.

The International Association of Insurance has issued a circular to insurers transacting business in the state that reminds the companies of their responsibilities notes that corporate governance is a critical element for the solvency factor of the insurance companies.

It would not be wrong to say that it easier to ensure the adherence of the insurance companies to the ethical governance, as compared to the other involved bodies. While insurers are responsible for smooth governance in the company, they are the corporate governance instruments as well. Insurers are long-term investors in equity and bonds who are naturally interested in preventing corporate failures and ensure positive investment returns.

Attorneys:

Attorneys, of late, have been gradually assuming greater importance with reference to the corporate governance practices. The Securities and Exchange Commission has drafted a set of rules which if adopted, will require the attorneys to keep a vigil on the violations of the governance practices by the directors, officers, and other agents of business associated with public companies.

The attorneys will have to blow the whistle up the ladder, on witnessing any material violation of security laws or breach of the fiduciary duties. These rules hold good. For any such listed company which is situated in US. While the attorney is expected to inform the management up the ladder regarding the wrongdoers, if he feels that there has not been an Adequate and appropriate action by the management, he has the right to make a ‘noisy withdrawal’ i.e.…….he can duly report the same to the security exchange commission and withdraw his legal representation from the company.

Actuaries and Auditors:

Actuaries and auditors are frequently held liable for failure to identify corporate governance failures. Especially, in case of the policies like professional liability insurance, the assessment of the litigation risk becomes a vital element for the carriers.

Enron is the historical example that shook the corporate and unveiled the ill accounting practices followed by the auditors. That was the time when only Enron and Arthur were held responsible for the gross violation of ethics. Today, there are around 30 such auditing firms that have admitted, ‘accounting irregularities’, which are the subject of formal investigation by the SEC. considering the significance of the auditor’s role in a company and the deteriorating condition of the auditor’s the SEC has framed rules under the laws like Sarbanes-Oxley Act, Patriot Act, etc. equally important is the role of an actuary.

The actuarial profession is responsible for managing insurance policyholders’ reasonable expectations within companies. For example, for company must hold certain reserves, sufficient cash, and sufficient stocks and bonds to make sure those products match sufficiently. That forms a part of the job of an actuary. Hence, the statutory role for external as well as internal actuaries forms a part and parcel of the governance mechanism in insurance industry.

Directors and officers:

Directors and officers have been much in limelight since the recent spate of corporate scandals at WorldCom and Enron. Insurance companies offer a D&O liability insurance, which, as the name suggest, protects directors and officers by insuring them for the risks associated with their responsibilities.

The most frequent sources of suits against D&O are the shareholders of the company. D&O insurance was initially referred to as ‘sleep insurance’. Since D&O policies can cover acts that occurred. Well before the inception of coverage, insurers have a corporate liabilities covered under Directors and officers liability insurance.

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