1. The Governance and Risk Management Framework takes effect on 1 April 2015.

2. A governance framework must be adopted by insurers to ensure the prudent management and oversight of their insurance business.

The governance framework must be proportionate to the nature, scale and complexity of the insurer’s business.

The governance framework applies to both short-term and long-term insurers.

3. The board of directors of an insurer must at all times consist of a sufficient number of non-executive directors and independent directors to promote objectivity in the decision-making of the board.

Insurers must ensure individuals on the board have a spread and level of knowledge, skills and expertise required for an insurance company.

4. There must be a ‘lead independent director’.

This director will provide leadership and advice to the board where the chairperson is conflicted. This director will also preside at meetings of the board where the chairperson is absent or conflicted.

5. Directors, in addition to their duties in terms of the Companies Act, also have additional duties set out in the governance framework.

For example directors must always act in the best interest of the policyholder.

6. The insurer must have a risk and remuneration committee.

7. An insurer must establish and maintain an effective risk management system and develop and regularly review its risk management policy.

8. Insurers must develop a fit and proper policy to be applied to their directors, managing executive, public officer, auditor, statutory actuary, head of control function or significant owner.

9. An insurer must have a reinsurance and risk transfer policy.

The policy must ensure transparent reinsurance arrangements so that the regulator can understand the economic impact of reinsurance and other risk transfer arrangements.

The policy must, amongst other things, assess the creditworthiness of the reinsurance counterparty.

10. An insurer must appoint a ‘head of control function’.

Such person will report in writing to the board on any matter relating to the business of the insurer where in their opinion a material contravention of legislation affects the insurer.