The insurance and consumer community is well protected by good corporate governance. There is a need to involve consumers to express their responses through an effective method. The dominant shareholders should work for the interests of the consumers and not purely in their self-interest.
There in need to develop an effective mechanism to check corporate behavior till market mechanism. The companies have accumulated sufficient funds of policyholders and declare him insolvent. Thus, the financial conditions of consumers are made are unfavorable.
The management is made responsible for some failures towards consumer’s interest whereas the shareholders are enjoying their supremacy. The healthy relationship between policyholders and shareholders should be developed for the economic and social development of a country.
The Board of shareholders and management must see that the policy holder’s interests are fully served by the company. The corporate governance in Indian insurance companies has got momentum but its progress is very slow as the management is not very efficient.
There are lacks of experienced directors, inadequate information systems, inadequate system of control, individual and accountability is into developed. Ownership structure and lack of enforcement capabilities have caused poor governance.
Components of Corporate Governance
The corporate governance is mainly concern with how ownership influence, promoting corporate fairness, transparency, and accountability Briefly, corporate Governance means doing everything to improve the relationship between companies and their shareholders to improve the quality.
If directors, to encourage people to think long-term, to ensure that information needs of all stakeholders. Corporate Governance becomes an organized system when companies are directed and controlled by the management in the best interest of the stakeholders and ensuring greater transparency and financial reporting the investors’ confidence should be installed and not shaken by the management practices corporate governance in insurance companies make corporate entities institution investment and business opportunity.
Insurance companies are an important constituent of corporate government keeping an open mind listening and learning from others ready to share ideas and thoughts recognizing and rewarding cooperation and franchise development skill of employees. Concerned about delivering on promises inducing teamwork and inspiring management to their best are the various example of corporate governance.
The insurer should develop transparency of financial resources the examples of transparency present in public sector LIC and have been a guideline for the private insurer the board of director consists one chairman to executive director three nominee directors and four independent directors the board of director has set up audit committees investment committee IT committee and personnel and administration committee apart from policyholder comical at divisional level and zonal advisory board at zonal office.
The corporate performance is subject to public scrutiny insurance companies are directly and indirectly link with banking industry financial markets and the industrial and agricultural development along with the protection of policyholder interest they are accountable to the policyholder and shareholder the competitive atmosphere of insurance industry forces them to cut down their costs of operation.
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