Federal Office of Private Insurance FOPI
Federal Office of Private Insurance FOPI
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FOPI News no. 7
FOPI News no. 7 of 21 December 2006 – A new FOPI Directive on Corporate Governance, Risk Management and Internal Control Systems
In the process of implementing the revised Insurance Supervision Act, the Federal Office of Private Insurance (FOPI) has issued a new directive on corporate governance, risk management and internal controlling. The directive defines, according to certain fundamental principles, the exact requirements from insurance companies, insurance groups and conglomerates reporting to FOPI. The directive will come into effect on 1 January 2007 and must be implemented by 31 December 2007 at the latest.
Corporate governance serves the purpose of providing a functional balance between the various organs within a company ("checks and balances“), adequate transparency of the internal operating procedures, as well as a coordination of the company's goals and objectives with the expectations of the various interest groups.
An appropriate risk management and an effective internal control system (ICS) ensure that risk potential is recognised and assessed early on and can then be monitored. Similarly, measures for monitoring significant risks and accumulation of risks can be introduced punctually.
The new directive makes it a proviso that a system be created (where one is not already in place) by all insurance companies, groups and conglomerates, which is efficient and practical, as well as appropriate to the given characteristics and circumstances of the firm. The directive is based on tried and tested established standards, as well as on the latest findings in international developments in this area.
One of FOPI's tasks is to review that the corporate governance, risk management and internal control system used by the bodies under supervision, are appropriate and in accordance with the statutory supervisory requirements. For this purpose, FOPI will be using, among others, a newly developed supervisory instrument that makes possible a qualitative examination of the corporate governance and the internal control system in place in an insurance company.
The directive enters into force on 1 January 2007 and must be implemented by enterprises that fall subject to it, by 31 December 2007.
Information: Media Section FOPI, tel. 031 325 01 65
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