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📄 '''Terms of reference''' is a governance document that defines the purpose, authority, composition, responsibilities, and operating procedures of a committee, working group, or delegated body within an insurance organization. In the insurance sector, terms of reference are foundational to the functioning of boards and their sub-committees — such as [[Definition:Audit committee | audit committees]], [[Definition:Risk committee | risk committees]], [[Definition:Underwriting committee | underwriting committees]], and [[Definition:Remuneration committee | remuneration committees]] — and serve as evidence that an insurer's [[Definition:Corporate governance | governance framework]] meets regulatory expectations. Supervisory regimes including [[Definition:Solvency II | Solvency II]] in Europe, the UK's Senior Managers and Certification Regime ([[Definition:Senior Managers and Certification Regime (SM&CR) | SM&CR]]), and the [[Definition:Insurance Authority | Hong Kong Insurance Authority's]] corporate governance guidelines all expect insurers to maintain documented terms of reference for their key governance bodies.

🔧 A typical terms of reference document specifies the committee's mandate — for example, whether an underwriting committee has authority to approve risks above a certain [[Definition:Gross written premium (GWP) | premium]] threshold or whether a risk committee can direct changes to the [[Definition:Risk appetite | risk appetite]] framework. It outlines membership requirements, quorum rules, meeting frequency, reporting lines to the board, and escalation protocols. In [[Definition:Lloyd's of London | Lloyd's]], [[Definition:Managing agent | managing agents]] must maintain terms of reference for their boards and principal committees as part of the market's minimum standards, and Lloyd's oversight teams review these documents during [[Definition:Performance management | performance assessments]]. Similarly, [[Definition:Insurance group | insurance groups]] operating across jurisdictions often maintain group-level terms of reference that cascade into subsidiary governance structures, ensuring consistency while accommodating local [[Definition:Regulatory compliance | regulatory]] requirements.

⚖️ Clear, well-drafted terms of reference prevent governance ambiguity — a problem that has surfaced in high-profile insurance failures where committees either exceeded their authority or failed to exercise it. When [[Definition:Regulatory review | regulators]] investigate governance breakdowns, one of their first requests is typically for the terms of reference of relevant committees, using them to assess whether the organization had appropriate structures in place and whether those structures functioned as intended. For [[Definition:Insurtech | insurtech]] firms scaling rapidly, establishing terms of reference early signals maturity to [[Definition:Investor | investors]], [[Definition:Reinsurance | reinsurers]], and capacity providers. Far from being a bureaucratic formality, this document anchors accountability: it records who is empowered to make which decisions, ensuring that critical functions like [[Definition:Claims management | claims oversight]], [[Definition:Capital management | capital management]], and [[Definition:Compliance | compliance]] are never left unattended.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Corporate governance]]
* [[Definition:Board of directors]]
* [[Definition:Risk committee]]
* [[Definition:Underwriting committee]]
* [[Definition:Senior Managers and Certification Regime (SM&CR)]]
* [[Definition:Delegated authority]]
{{Div col end}}

Definition:Terms of reference - Revision history

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