Part Governance - Insurance (prudential standard) determination No. 12 of 2008 - Prudential Standard GPS 510 - Governance - Governance

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Governance

Objectives and key requirements of this Prudential StandardThe ultimate responsibility for the sound and prudent management of general insurers and authorised non-operating holding companies rests with their Board of directors. It is essential that regulated institutions have a sound governance framework and conduct their affairs with a high degree of integrity.A culture that promotes good governance is of benefit to all stakeholders of a regulated institution and helps to maintain public confidence in the institution.This Prudential Standard sets out minimum foundations for good governance of regulated institutions. It aims to ensure that regulated institutions are managed in a sound and prudent manner by a competent Board of directors, which is capable of making reasonable and impartial business judgements in the best interests of the regulated institution and which gives due consideration to the impact of its decisions on policyholders.The governance arrangements of regulated institutions build on these foundations in ways that take account of the size, complexity and risk profile of the institution.The key requirements of this Prudential Standard include:specific requirements with respect to Board size and composition;the chairperson of the Board must be an independent director;a Board Audit Committee must be established;regulated institutions must have a dedicated internal audit function;certain provisions dealing with independence requirements for auditors consistent with those in the Corporations Act 2001; andthe Board must have a policy on Board renewal and procedures for assessing Board performance.A number of requirements also apply to Category C insurers (as defined in Prudential Standard GPS 001 Definitions).