Life Insurance (prudential standard) determination No. 2 of 2006 - Prudential Standard LPS 510 - Governance
The Board and senior managementThe Board and senior management
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The Board and senior management
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The Board of directors (the Board) of a life company is ultimately responsible for the sound and prudent management of the life company. This Prudential Standard sets out the minimum requirements that a life company must meet in the interests of promoting strong and effective governance.
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The Board of a life company must have a formal charter that sets out the roles and responsibilities of the Board.
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The Board, in fulfilling its functions, may delegate authority to management to act on behalf of the Board with respect to certain matters, as decided by the Board. This delegation of authority must be clearly set out and documented. The Board must have mechanisms in place for monitoring the exercise of delegated authority. The Board cannot abrogate its responsibility for functions delegated to management.
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The Board must ensure that directors and senior management of the life company, collectively, have the full range of skills needed for the effective and prudent operation of the life company, and that each director has skills that allow them to make an effective contribution to Board deliberations and processes. This includes the requirement for directors, collectively, to have the necessary skills, knowledge and experience to understand the risks of the life company, including its legal and prudential obligations, and to ensure that the life company is managed in an appropriate way taking into account these risks. This does not preclude the Board from supplementing its skills and knowledge through the use of external consultants and experts.
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Senior management of the life company (and senior management of an EFLIC), with responsibilities relating to the business in Australia, must be ordinarily resident in Australia.
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Members of the Board and senior management (and senior management of the EFLIC) must be available to meet with APRA on request.
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The Board must provide the external auditor[2] and the Appointed Actuary of the life company with the opportunity to raise matters directly with the Board (the Compliance Committee for an EFLIC[3]).