FOR IMMEDIATE RELEASE
NAIC COMMITTEE ADOPTS CORPORATE
Models will allow for the collection of detailed information on the
corporate governance practices of insurers on an annual basis
LOUISVILLE, Ky. (Aug. 18, 2014) -The NAIC’s Financial Condition Committee adopted a Corporate Governance Annual Disclosure Model Act and supporting Model Regulation, which provides a means for insurance regulators to receive additional information on the corporate governance practices of U.S. insurers on an annual basis.
Under the requirements of the Model Act, U.S. insurers will be required to
provide a detailed narrative describing governance practices to their lead
state or domestic regulator by June 1st of each year. The narrative will be
protected by strict confidentiality measures, which were included within
the models to encourage insurers to be open and transparent in describing
their governance practices to regulators. Insurers will be allowed some
discretion in determining the level within the organization to report their
corporate governance practices at, depending upon their structure and
organization. The new disclosure requirements are expected to commence in
"The Corporate Governance Annual Disclosure Model Act represents nearly
five years of thoughtful discussion and work regarding regulatory guidance
that details best practices for the corporate governance of insurers," said
Susan Donegan, Commissioner of the Vermont Department of Financial
Regulation and Chair of the Corporate Governance Working Group. "This model
act was developed to promote regulatory oversight as well as protect the
confidentiality of the insurer."
"Annual and transparent disclosure of corporate governance practices of
insurers will ensure that state regulators have a comprehensive
understanding of the corporate governance structure, policies and practices
utilized by the insurer," said Joseph Torti, III, Rhode Island Deputy
Director and Superintendent of Insurance and Banking, and Chair of the NAIC
Financial Condition Committee, which oversees the work of the Corporate
Governance Working Group.
Key items required to be described within the corporate governance
- The insurer's
corporate governance framework and structure including duties and
structure of the Board of Directors and its committees;
- The policies and
practices of its Board of Directors and significant committees
including appointment practices, the frequency of meetings held and
- The policies and
practices directing Senior Management including a description of
defined suitability standards, the insurer's code of conduct and
ethics, performance evaluation and compensation practices, and
succession planning; and
- The processes by
which the Board of Directors, its committees and senior management
ensure an appropriate level of oversight to the critical risk areas
impacting the insurer's business activities including risk management
processes, the actuarial function, and investment, reinsurance and
business strategy decision-making processes.
for more information on the Corporate Governance Working Group.
About the NAIC
The National Association of Insurance Commissioners (NAIC) is the U.S.
standard-setting and regulatory support organization created and governed
by the chief insurance regulators from the 50 states, the District of
Columbia and five U.S. territories. Through the NAIC, state insurance
regulators establish standards and best practices, conduct peer review, and
coordinate their regulatory oversight. NAIC staff supports these efforts
and represents the collective views of state regulators domestically and
internationally. NAIC members, together with the central resources of the
NAIC, form the national system of state-based insurance regulation in the
U.S. For more information, visit www.naic.org.