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OECD Guidelines on Insurer Governance

image of OECD Guidelines on Insurer Governance

The OECD Guidelines on Insurer Governance offer a comprehensive set of principles on the governance of insurers that are intended to provide guidance and serve as a reference point for insurers, governmental authorities, and other relevant stakeholders in OECD and non-OECD countries. As financial institutions whose business is the acceptance and management of insurable risk, insurers should have sound governance and risk management practices so that they will be in a position to provide promised benefits to policyholders and beneficiaries and thus fulfil their insurance function in the economy.

The Guidelines on Insurer Governance emphasise the following key elements of insurer governance: an expected prudent approach to business and financial strategies; a well developed risk culture and risk management and internal control systems, supported by effective and independent control functions and integrated firm-wide reporting; sound compensation arrangements; a high level of financial expertise among board members and within senior management; and policies and procedures that ensure proper treatment of customers and policyholders. The Guidelines complement the OECD Principles of Corporate Governance, one of the twelve key Financial Stability Board standards for sound financial systems. 

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Recommendation of the Council on Guidelineson Insurer Governance

Considering that OECD Ministers agreed in 2002 that implementation of best practices in corporate and financial governance entails an appropriate mix of incentives, balanced between regulation and self–regulation, and that such governance should be improved to enhance transparency and accountability and thereby strengthen investor confidence and the stability and resilience of financial markets;

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