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Short term Insurance
Monday, May 1, 1989
Directive for directors

Following its support of one of the Melamet Commission’s recommendations, the Registrar of Insurance sent a circular to all short-term insurers last month. The Melamet Commission recommendation reads, “Financial institutions should have at least two executive directors of the board or senior members of management should attend board meetings with a duty to inform (hoard) members on issues for which enlightenment is sought.”
Assistant Registrar, Willem Heckroodt, points out that the measure is designed to open a line of communication between the executive and the board. “This way people who work at the coal face every day can report to the entire board on aspects with which board members have little daily contact.”
Mr Heckroodt adds that some insurers could may no executive directors. In other cases companies have some of their directors based overseas. Ideally, an executive director should report to the hoard, but it would also be acceptable to have a member of the upper echelons of management, such as a financial manager, filling the role.
Insurers had until the end of April to inform the Registrar whether existing arrangements are in compliance with the new recommendation. In his circular, the Registrar notes, “Where there are divergences, please advise this office of the arrangements currently in force and whether steps are being implemented to bring such arrangements into line with the recommendation of the Melamet Commission.”
Mr Heckroodt explains that reaction to the new requirement shows that between 90% and 95% of all insurers already comply. He adds that his office will do its best to work in conjunction with the industry. “We don’t adopt an autocratic approach and will work with insurers on this and other issues.”
The new recommendation has also been accepted by the Advisory Committee on Short-Term Insurance.

Copyright © Insurance Times and Investments® Vol:2.5 1st May, 1989
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