Irdai red-flags one chairman for 2 insurers

The insurance regulator has raised corporate governance concerns over the government’s move to appoint one person as chairman of two state-run insurers.

The government had sought Insurance Regulatory and Development Authority of India’s (Irdai) approval to appoint Anjan Dey as acting chairman of New India Assurance, a charge he already holds at New Delhi-based Oriental Insurance.


The government has opted for an interim chairman till the court case is settled.

“The regulator has also cited section 203 of the Companies Act, expressing its disapproval,” said a person in the know. Irdai did not respond to ET’s email.

Irdai shared its concerns last week after the government sought its formal nod for the appointment. Section 203 of the Companies Act says a whole-time managerial personnel shall not hold office in more than one company except in its subsidiary.

This can be allowed if it is approved by a resolution with consent of all the company’s board of directors. “There has been no such resolution passed by either Oriental or New India Assurance,” the executive quote above said.

Another official aware of the matter said Irdai has also pointed out that Oriental Insurance is a loss-making entity and asked if it will be prudent to further burden the chairman with the responsibility of New India Assurance in such a case.

“The regulator has said that both companies are market competitors and one chairman for both the firms is not a good corporate governance practice,” another official said.

New India Assurance, the market leader in the non-life insurance space, had reported a net profit of Rs 1,605 crore in 2020-21.

Last year, the Delhi High Court had said Bank Board Bureau (BBB) cannot select general managers and directors of public sector general insurers as it was not a competent body. “The appointments made pursuant to the impugned selections of general manager and directors of PSICs (public sector insurance companies) are liable to be set aside. It is ordered accordingly,” it had said.

The next hearing in the case is scheduled on March 21.

The government has opted for an interim chairman till the court case is settled.

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