MCA Board Resolution Rules for Insurance Purchase at Listed Indian Companies 2026: Section 179 and Disclosure

For most of the post-Companies-Act-2013 period, insurance procurement at listed Indian companies sat several layers below the board. The risk management function or the chief financial officer's office handled it, the broker handled the placement mechanics, and the audit committee occasionally noted the aggregate annual spend during the budget cycle. Insurance was a line item, not a governance subject. Through 2024 and into 2025, this began to change. By mid-2026, insurance procurement at large listed Indian companies has moved much closer to the board agenda, driven by market hardening, rising director-liability concern, and tighter committee-level risk oversight.

It is important to be precise about the legal position, because insurance procurement governance is often described loosely. There is no insurance-specific board-resolution threshold in the Companies Act, 2013. Section 179(3) of the Act lists the powers that the board may exercise only by means of a resolution passed at a board meeting (and not by circulation or by delegation), and Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 adds a further set of such powers. Contracts of insurance are not enumerated in either list. Anyone advising a board that a specific rupee threshold of insurance premium automatically triggers a mandatory Section 179 board resolution is overstating the statute. What is true is that boards retain the general power and duty to govern material contracts, that the company's articles and delegation of authority matrix usually route large or unusual commitments to the board or a board committee, and that several real regulatory strands (the SEBI mandate for directors and officers cover, related-party-transaction rules, risk management committee oversight, and disclosure obligations) bear directly on how insurance is bought and reported.

The market drivers are real and significant. The Indian commercial insurance market hardened through 2023-25, with property insurance rates rising materially after the de-tariffing corrections, cyber insurance becoming both more expensive and harder to place, and D&O insurance costs increasing for sectors facing regulatory or litigation exposure. Insurance moved from a routine renewal to a material and volatile cost line, and audit committees noticed. As premium quantum and volatility rose, so did the case for treating major placements as a board-committee matter rather than a back-office one.

Director-liability concern reinforced the shift. Prosecutions of corporate officers under the Bharatiya Nyaya Sanhita, 2023 (which replaced the Indian Penal Code, 1860 from 1 July 2024) and SEBI enforcement actions against directors for failures of oversight under the Listing Regulations raised the personal stakes for directors. Boards became more concerned about whether the company's D&O policy adequately protected the directors themselves, and whether the broader insurance programme reflected appropriate due diligence. The personal-stakes element made directors more willing to invest board time in insurance matters.

The consolidating Indian insurer landscape added urgency. With the insurer panel reshaping after the move to 100% FDI and the resulting M&A activity, with new foreign-controlled entities entering, and with treaty-continuity questions arising at acquired insurers, boards recognised that a delegate-and-forget approach to insurance procurement was no longer prudent. The board needed visibility into insurer financial strength, the broker relationship, and the policy terms.

The net result is that as of mid-2026, listed Indian companies are giving insurance procurement more structured board and committee attention than at any point since the Companies Act, 2013 came into effect, even though the legal trigger is general governance and committee oversight rather than an insurance-specific statutory threshold. The practice has implications for the company secretary, the CFO, the chief risk officer, the audit committee, the risk management committee, the board, and the insurance broker. This post sets out the genuine legal framework and the practical compliance steps that listed entities should take through the FY2026-27 governance cycle.

A further driver, operationally important, is statutory-auditor scrutiny of insurance-related accounting. National Financial Reporting Authority (NFRA) inspections have raised audit-quality expectations across listed-entity audits, and auditors increasingly probe premium recognition timing, the accrual of insurance recoveries against pending claims, and the treatment of structured-cover and captive arrangements. That scrutiny cascades into demands for more comprehensive insurance-programme documentation from management, which audit committees increasingly receive as part of their year-end review.

Section 179 of the Companies Act, 2013 distinguishes between powers the board can delegate to committees, the managing director, the manager, or other officers, and powers exercisable only at a board meeting (the board-only powers). Section 179(3) lists powers exercisable only at board meetings, including making calls on shareholders, authorising buy-back of securities under Section 68, issuing securities including debentures, borrowing monies, investing the funds of the company, granting loans or giving guarantees or providing security in respect of loans, approving financial statements and the board report, and diversifying the business of the company. Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 adds further board-only powers, including making political contributions, appointing or removing key managerial personnel, and appointing internal and secretarial auditors.

Contracts of insurance are not enumerated in Section 179(3) or in Rule 8. There is no statutory rupee threshold of insurance premium that automatically converts an insurance placement into a board-only power. This is the single most important point for company secretaries and brokers to get right, because it is frequently misstated. Buying insurance is ordinary commercial activity that the board can, and almost always does, delegate to management.

What actually routes a material insurance decision to the board or a board committee is a combination of three real mechanisms. First, the company's delegation of authority (DoA) matrix and financial-powers policy. Most large listed entities set internal monetary limits above which a contract, capital commitment, or expense requires board or board-committee approval, and a very large property, D&O, or cyber placement can cross those internally set limits and reach the board on that basis. These limits are a matter of internal governance choice, not statute, and they vary widely between companies. Second, the audit committee and risk management committee charters, which under the Listing Regulations and the company's own terms of reference typically require periodic review of the insurance programme as part of risk oversight. Third, the related-party-transaction rules under Section 188 of the Companies Act and Regulation 23 of the SEBI Listing Regulations, which mandate audit committee approval where the insurer or broker is a related party, irrespective of size.

Because the trigger is internal policy plus committee oversight rather than a fixed statutory number, practice differs across the market. Some boards delegate all insurance procurement to a designated officer and receive an annual review; others bring large or unusual placements (a substantial D&O tower, a first-time cyber programme, a captive arrangement, a multi-thousand-crore industrial property programme) to the board or risk management committee on a case-by-case basis. The prudent approach for a listed entity is to set the internal threshold deliberately in the DoA matrix, document it, and apply it consistently, rather than to claim that a non-existent Section 179 insurance threshold compels a particular outcome.

Where a placement is brought to the board or a committee, the resolution and minutes should not be a generic rubber stamp. Good practice (and what auditors and proxy advisers increasingly expect) is for the resolution or the supporting board paper to record the insurer and its financial strength, the broker, the type of cover, the sum insured or limit of liability, the premium, the policy tenure, the principal exclusions and deductibles, the alternatives considered, and any related-party considerations. A resolution of the form 'approval for procurement of insurance covers as recommended by management,' with no underlying detail in the papers or minutes, is weak governance even though it is not unlawful, because it leaves no record that the board applied its mind.

The size of the programme drives where it lands. For large listed entities, D&O programmes have grown substantially and industrial property programmes for major manufacturing assets can run to thousands of crore of sum insured with large annual premiums, so these placements frequently cross internal DoA limits and reach the board or risk management committee. For mid-cap and smaller listed entities, total insurance spend is more modest and most placements stay within delegated authority, with the board engaging mainly on the D&O programme and on any related-party arrangement. Company secretaries should map the renewal calendar against the company's own DoA limits to identify in advance which placements will need board or committee approval, so that the board calendar can accommodate them.

Section 177 of the Companies Act, 2013 mandates the audit committee for every listed company and prescribed unlisted public companies, with terms of reference including oversight of financial reporting, related-party transactions, internal financial controls, and risk management. Insurance procurement intersects with audit committee oversight at three points: as a risk management matter, as a related-party transaction where the insurer is a related party, and as a financial reporting matter where the premium expense and any provisioning for self-insurance retention is material.

The risk management oversight of insurance has expanded materially in practice through 2024-25. Under Regulation 21 of the SEBI Listing Regulations and its Schedule, the risk management committee (mandatory for the top 1,000 listed entities by market capitalisation) is charged with monitoring and reviewing the risk management plan, which in well-run companies expressly includes the insurance programme. Where a separate risk management committee does not exist, the audit committee performs the function. Good practice is for the committee to review the company's insurance programme at least annually, covering the adequacy of cover relative to identified risks, the structure of the programme including retention and limits, the insurer panel composition and financial strength, the broker arrangement and remuneration structure, and the claims experience over the recent period. The review should be evidenced through specific agenda items, papers presented to the committee, and committee minutes recording the review and any directions issued.

For listed entities with risk management committees separately constituted (mandatory for the top 1,000 listed entities by market capitalisation under the SEBI Listing Regulations as amended), the risk management committee is the primary oversight forum for insurance, with the audit committee receiving information through cross-committee reporting. For smaller listed entities without a separate risk management committee, the audit committee directly performs the function. In both cases, the company secretary should ensure that the agenda papers presented to the committee include a structured insurance review at least annually, with quarterly updates on material changes (new placements, significant claims, insurer changes).

The related-party-transaction oversight of insurance procurement applies where the insurer or the broker is a related party of the listed entity under Section 2(76) of the Companies Act. The related-party status arises most commonly in promoter-group situations: where the promoter group controls or has significant influence over an insurer (Bajaj group with Bajaj Allianz, Tata group with TATA AIG, Aditya Birla group with Aditya Birla Health and Aditya Birla Sun Life, ICICI group with ICICI Lombard and ICICI Prudential), procurement by other entities in the same promoter group raises related-party considerations. The same applies to brokers: a broker that is part of the listed entity's promoter group, or in which the listed entity has a substantial holding, triggers related-party-transaction governance.

The related-party-transaction framework under Section 188 of the Companies Act and Regulation 23 of the SEBI Listing Regulations requires audit committee approval, arm's-length-pricing justification, and disclosure in the quarterly RPT filing and the annual report. For insurance procurement, the arm's-length test is supported by competitive quotes obtained from at least two unrelated insurers offering comparable cover, with documentation showing that the related-party insurer's terms are commercially competitive. Where the related-party insurer is significantly cheaper, the audit committee should still review the comparability of cover (terms, exclusions, claims service standards) before approving the procurement, because pure price-driven selection can produce risk-management gaps that surface at claims stage.

The materiality thresholds for related-party-transaction approval are set out in Regulation 23 of the Listing Regulations. Transactions exceeding the lower of INR 1,000 crore or 10% of annual consolidated turnover require shareholder approval through special resolution, in addition to audit committee approval. Most listed-entity insurance procurements fall below the special-resolution threshold but above the audit-committee-only threshold (which is generally applicable for any related-party transaction of material value). The audit committee approval should be specific to each individual procurement decision or to a framework arrangement for the year covering multiple specific procurements within defined parameters.

For the financial reporting oversight, the audit committee should examine the accounting treatment of insurance premium under Ind AS 116 (if any portion of the cover is classified as a lease under specific structures), Ind AS 37 (provisions for self-insured retentions or aggregate stop-loss positions), and Ind AS 1 disclosure of significant judgements. The introduction of Ind AS 117 from 1 April 2024 has changed the accounting treatment of insurance contracts from the insurer's perspective; it does not directly change the accounting at the corporate insurance buyer, but it has prompted some buyers to revisit their accounting for complex insurance arrangements such as captive structures and large structured-cover placements.

The audit committee should also examine the company's accrual practice for insurance recoveries against pending claims. Where a material loss has occurred and an insurance claim is in progress, the company's accounting policy on recognising the recovery as an asset should be reviewed for consistency with Ind AS 37 and the established accounting practice. Aggressive recognition of insurance recoveries before reasonable certainty of the recovery can produce restatement risk if the recovery is ultimately reduced or denied. The audit committee's review of this practice intersects with the auditor's view on the same matter and should be carefully documented.

There is no SEBI rule that requires a stand-alone, insurance-specific quarterly disclosure of every board-approved insurance placement. Claims to that effect should be treated with caution. Insurance instead surfaces in listed-entity disclosure through the existing, general framework of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Company secretaries should work from the actual regulations rather than from an imagined insurance disclosure schedule.

The primary route is Regulation 30 material-event disclosure. Regulation 30, read with the SEBI master circular on disclosure and Schedule III of the Listing Regulations, requires prompt disclosure of events material to the company or to investor decision-making. An insurance matter can clearly cross that bar: a large insured loss and the status of the related claim, a coverage denial or dispute that affects the financial position, the lapse of a material cover, or a significant change in primary insurer arising from insurer M&A or solvency concern. Whether a given insurance event is material is a determination the company makes against the Regulation 30 framework and its own board-approved materiality policy. It should be reviewed by the company secretary and the CFO at each event, with audit committee input where the materiality question is not clear-cut, and SEBI enforcement practice generally treats under-disclosure more harshly than over-disclosure.

The second route is the annual report. The board report and the management discussion and analysis required under the Companies Act and the Listing Regulations routinely cover the company's risk management framework, and insurance is part of that narrative. Beyond the D&O-specific point below, there is no separate Schedule V line item that mandates naming the company's five largest insurers or tabulating claims experience; companies that disclose such detail do so as a matter of voluntary transparency, not because a specific SEBI circular requires it. The honest position for a broker advising a listed client is that the annual report should describe the insurance programme at a level that supports the risk management narrative and any specific statutory points (such as the directors and officers cover for independent directors), without overstating a disclosure obligation that does not exist.

The Business Responsibility and Sustainability Reporting (BRSR) framework, mandatory for the top 1,000 listed entities, requires reporting on risk management, business continuity, and disaster management. Where a company chooses to reference its insurance arrangements in the risk management narrative, the BRSR and the annual report risk disclosures should be consistent, with the BRSR providing the broader risk strategy context. For companies with ESG-linked insurance arrangements (climate-related parametric covers, environmental impairment liability, supply-chain resilience covers), a short explanation of how the insurance programme supports the company's risk and sustainability strategy is useful to institutional investors and to credit rating agencies (CRISIL, ICRA, CARE Ratings, India Ratings) assessing the risk management framework, again as good practice rather than a mandated insurance schedule.

The related-party-transaction disclosure route is the one place where insurance procurement is unambiguously and specifically caught. Where the insurer or the broker is a related party, the transaction must be reported in the half-yearly RPT disclosure to the stock exchanges under Regulation 23(9) of the Listing Regulations in the SEBI-prescribed format, and is also reflected in the related-party-transaction note to the financial statements. This is a real, specific, and well-defined obligation, and it is the obligation company secretaries should focus on rather than a generic insurance-disclosure regime.

For disclosures that might touch competitive positioning (sensitive insurance terms that could reveal strategic vulnerabilities), companies have limited but real flexibility to use summary descriptions where genuine commercial sensitivity exists. The bar for invoking commercial sensitivity is high, and the company secretary should obtain legal opinion before withholding information that the materiality framework would otherwise require. Where the determination is uncertain, err toward disclosure.

D&O insurance occupies a distinct position in listed-entity insurance governance because it directly protects the directors who oversee the procurement, and because SEBI has made it mandatory for independent directors of the largest listed companies. Getting the regulation right matters, since it is often described inaccurately.

Regulation 25(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates that the top 1,000 listed entities by market capitalisation undertake directors and officers liability insurance for all their independent directors, with the sum assured and the risks covered as the board may determine. The provision was first introduced in October 2018 for the top 500 entities after the IL&FS episode, and was expanded to the top 1,000 entities with effect from 1 January 2022. It is therefore a mandate to buy and maintain D&O cover for independent directors, not a procedural rule that gates D&O procurement through an independent-director-only resolution. There is no current SEBI requirement that the D&O programme be approved by a special vote of disinterested directors; that characterisation is incorrect. What is true is that good governance practice routes the D&O programme decision to the board or risk management committee because it protects the directors themselves, and that boards commonly involve independent directors closely given the conflict-of-interest dimension.

The D&O policy itself is a special-purpose contract that covers the company, the directors, and the officers against claims arising from wrongful acts in their corporate capacity. The standard D&O policy structure includes Side A (cover for directors and officers where the company cannot indemnify them, typically due to legal restrictions on indemnification of certain conduct), Side B (reimbursement to the company for indemnification of directors and officers), and Side C (cover for the company itself for securities claims and certain other corporate claims). The programme structure decision (Side A only, Side A and B, full Side A, B, and C) has both economic and governance implications that the board should specifically address.

For listed entities, Side C cover for securities claims is increasingly important given the rising frequency of class actions, shareholder claims, and regulatory enforcement. SEBI's enforcement activity through 2024-25, including specific actions against directors for failures of oversight under the Listing Regulations, has elevated personal-liability concerns and pushed companies toward more comprehensive D&O programmes. The average D&O sum insured at top 100 listed entities has increased from INR 100-300 crore in 2020 to INR 300-1,000 crore in 2026, with some financial-services and pharmaceutical companies carrying programmes above INR 1,500 crore.

The D&O programme typically has multiple layers from different insurers in a tower structure, with primary cover from an Indian insurer (ICICI Lombard, HDFC Ergo, Bajaj Allianz, Tata AIG, or another domestic insurer), excess layers from other Indian insurers, and high-excess layers placed through international markets via GIFT City IFSC or Lloyd's. The tower structure provides capacity, diversifies insurer concentration risk, and enables access to international expertise in claims handling for complex securities matters. The board approval of the D&O programme should specifically review the tower structure, the relative reliability of each layer's insurer, and the contract terms aligning the layers.

On the remuneration question, the governing provision is Section 197(13) of the Companies Act, 2013 itself, not a separate circular. Section 197(13) provides that where a company takes insurance on behalf of its managing director, whole-time director, manager, CEO, CFO, or company secretary to indemnify them against liability for negligence, default, misfeasance, breach of duty, or breach of trust, the premium is not treated as part of their remuneration. The important proviso is that if any such person is proved to be guilty, the premium for that person is then treated as part of remuneration. This settles the long-standing question of whether D&O premium counts toward the Section 197 managerial-remuneration limits: in the ordinary case it does not, so high D&O premiums do not by themselves trigger Section 197 shareholder-approval requirements, but the position changes if guilt is established.

Disclosure of D&O cover in the annual report is, beyond the Regulation 25(10) mandate, largely a matter of good practice rather than a granular statutory schedule. Where companies choose to disclose, useful content includes the aggregate sum insured of the D&O programme, confirmation that independent directors are covered as required, the policy tenure, any significant exclusions or sub-limits affecting cover for specific risks (cyber-related D&O claims, environmental claims, anti-bribery claims), and the deductible structure (corporate retention versus director retention). Companies should be cautious about disclosing specific pending-claim particulars.

The disclosure of pending claims is delicate because claim disclosure may itself become evidence in the claim proceeding. SEBI's framework provides limited flexibility through summary descriptions for genuinely confidential matters, but the company secretary should obtain specific legal advice on the disclosure scope before finalising the annual report content. Premature or excessive disclosure of pending claim particulars can expose the company and the directors to additional litigation risk; under-disclosure can produce regulatory enforcement risk. The balance is contextual and requires case-by-case analysis.

For mid-cap and small-cap listed entities, the D&O programme structure is often simpler (a single insurer with single-layer cover at INR 100-300 crore sum insured), which simplifies the governance analysis. However, the regulatory framework applies uniformly, and the company secretary, CFO, and risk management function should ensure that the simpler programme structures still receive the appropriate board approval and disclosure treatment.

Listed entities should design their FY2026-27 insurance procurement governance around six workstreams that translate the regulatory framework into operational practice. The workstreams should be coordinated by the company secretary in collaboration with the CFO, the chief risk officer, and the lead broker, with the audit committee or risk management committee providing oversight.

First, conduct a mapping exercise to identify all current and upcoming insurance procurements against the company's own delegation of authority limits and against the related-party-transaction rules. The mapping should cover the existing programme as renewals approach and any new placements anticipated during the year. For each procurement, the mapping should identify whether the placement crosses an internal DoA limit that requires board or committee approval, whether the insurer or broker is a related party (which mandates audit committee approval regardless of size), and whether any material-event disclosure consideration arises. The mapping output should be a structured schedule attached to the company secretary's quarterly compliance report to the audit committee.

Second, design the board calendar to accommodate the required approvals at appropriate intervals. Insurance renewals at listed entities typically cluster around the financial year-end (March renewals) and the calendar year-end (December renewals), with some specialised covers having mid-year renewals. The board calendar should provide for approval of major renewals at the board meeting preceding the renewal date, with sufficient time for the audit committee to review the recommendation in advance. The company secretary should prepare a comprehensive recommendation paper for each board-approval-required procurement, addressing the procurement structure, the insurer selection rationale, the broker arrangement, the major terms, the alternatives considered, and any related-party considerations.

Third, establish or refresh the delegation framework for below-threshold procurements. The board's general delegation of insurance procurement authority to designated officers should be documented in a specific board resolution, refreshed annually as part of the general delegation review at the first board meeting of each financial year. The delegation should specify the categories of insurance covered, the financial limits applicable to each category, the reporting obligation back to the board (typically quarterly reporting), and the exception trigger that brings a specific procurement back to the board even within the delegated authority.

Fourth, design the audit committee or risk management committee review framework for the annual insurance programme review. The committee should receive a structured paper from management at least once a year, covering the programme adequacy assessment, the insurer panel composition, the broker arrangement, the claims experience, the loss-cost trend, and the recommended programme changes for the coming year. The paper should include benchmark comparisons against industry peers where reasonable benchmarks can be constructed. The committee should record specific directions issued in its minutes, with management reporting back on implementation at the next review.

Fifth, integrate the insurance procurement framework with the related-party-transaction governance and the SEBI disclosure obligations. The company secretary should maintain a master schedule of insurance procurements requiring related-party-transaction treatment, with the audit committee approval status, the arm's-length pricing documentation, and the half-yearly RPT disclosure status (under Regulation 23(9)) tracked for each. The integration should be reflected in the company's broader RPT policy and disclosure framework, ensuring consistent treatment across all related-party engagements.

Sixth, prepare the annual report and risk management narrative covering the insurance programme. The content should be drafted by the risk management function with input from the broker, reviewed by the company secretary and the CFO, and finalised by the audit committee before inclusion in the annual report and the BRSR. The content should describe the programme at a level that supports the risk management narrative and confirms the Regulation 25(10) D&O cover for independent directors, with the BRSR integration considered carefully. Where the company has significant D&O cover, any voluntary D&O disclosure should receive specific legal review for confidentiality considerations on any pending claims.

Platforms that support listed entities and their brokers in delivering structured insurance procurement governance documentation are emerging in the Indian market. Sarvada is one such platform supporting brokers in preparing board-recommendation papers, audit committee review documents, delegation-of-authority and related-party mapping, and disclosure-content drafts integrated with the broker's underlying placement work. Request Access to evaluate the platform capabilities for the listed-entity governance work that boards now expect.

Governance expectations around insurance will continue to tighten through FY2026-27 and beyond, driven less by any single new statute than by a harder insurance market, more active SEBI enforcement against directors, sharper auditor scrutiny, and proxy-adviser attention to risk oversight. Listed entities should treat structured board and committee oversight of insurance, anchored in their own delegation of authority and in the genuine Regulation 25(10), Section 188, and Regulation 23 requirements, as the baseline of good practice rather than as a box-ticking exercise.