ARIZONA
HOUSE OF REPRESENTATIVES
|
SB 1007: insurance; corporate governance; disclosure |
||
|
PRIME SPONSOR: Senator Livingston, LD 22 BILL STATUS: Commerce |
|
|
Overview
Establishes laws governing a corporate
governance annual disclosure (CGAD).
History
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. According to the NAIC, Corporate governance is the system of rules, practices and processes by which an insurance company governs itself.
In 2014, the NAIC adopted the Corporate Governance Annual Disclosure Act which details requirements for extensive disclosure of regulated insurance companies' corporate governance practices. The Model Act will become an accreditation requirement on January 1, 2020. Upon state adoption of the NAIC models, each US insurer must submit a CGAD to its lead state or domestic regulator on an annual basis.
Provisions
Corporate Governance Annual Disclosure (Sec. 1)
Disclosure Requirements
1. Instructs an insurer, or the insurance group of which the insurer is a member, to submit a CGAD to the director (Director) of the Department of Insurance (ADOI), by June 1 each year.
2. Stipulates if the insurer is a member of an insurance group, the insurer must submit the CGAD to the chief regulatory official of the lead state for the insurance group.
3. Requires an attestation that the insurer, to the best of their belief and knowledge, has implemented the corporate governance practices be included in the CGAD.
4. Specifies that an insurer that is not required to submit a CGAD must do so on the Director's request.
5. Permits an insurer to provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level, or the individual legal entity level.
a. Outlines criteria in determining the appropriate level.
6. Requires the review of the CGAD be made through the lead state as determined by the most recent NAIC financial analysis handbook.
7. Specifies insurers are not required to duplicate information that is provided to the Director that is substantially similar to the information required in the CGAD, however the insurer must cross-refence the document in which the information is included.
Contents of CGAD
8. Stipulates an insurer to discretion of the responses to the CGAD inquires, provided the CGAD contains the material information necessary to allow the Director to gain an understanding of the insurer's corporate governance structure, policies and practices.
a. Permits the Director to request additional information that is deemed material and necessary.
9. Instructs the insurer to prepare the CGAD consistent with rules adopted by ADOI.
Confidentiality
10. Asserts certain documents, materials or other information are recognized as being proprietary and contain trade secrets.
a. Adds such documents are confidential and not subject to subpoena.
b. Authorizes the Director to use such documents in the furtherance of any regulatory or legal action.
c. Prohibits the Director from making such documents public without prior written consent from the insurer.
11. Specifies the Director, or a person who is acting under the authority of the Director who receives documents, materials or other CGAD-related information are not required to testify in any private civil action concerning any such confidential documents.
12. Outlines allowable actions of the Director with regards to sharing and receiving confidential and privileged CGAD-related documents.
13. Specifies the sharing of information and documents by the Director does not constitute a delegation of regulatory authority or rulemaking.
14. Asserts the Director is solely responsible for the administration, execution and enforcement of laws governing CGAD.
15. Specifies the disclosure of CGAD-related information or documents does not constitute a waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade-secret materials or other CGAD-related information.
Third-Party Consultants
16. Permits the Director to retain 3rd-party consultants as reasonably necessary to assist in the reviewing of the CGAD, at the insurer's expense.
a. Adds such persons retained are under the direction and control of the Director and must act in a purely advisory capacity.
b. Subjects such person to the same confidentiality standards and requirements as the Director.
c. Specifies certain duties of 3rd-parties.
17. Requires a written agreement with NAIC or a 3rd-party which governs sharing and the use of information that expressly requires the written consent of the insurer prior to making information public.
a. Outlines the contents of the written agreement.
Miscellaneous
18. Allows the Director to adopt rules and issue orders necessary to carry out CGAD requirements.
19. Specifies civil penalties for failure to timely file the CGAD.
20. Exempts ADOI from rulemaking for one year.
21. Contains a nonseverability clause.
22.
23.
24. ---------- DOCUMENT FOOTER ---------
25. Fifty-fourth Legislature SB 1007
26. First Regular Session Version 1: Commerce
27.
28. ---------- DOCUMENT FOOTER ---------