Oregon Administrative Rules
Chapter 836 - DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, INSURANCE REGULATION
Division 11 - ANNUAL STATEMENTS AND REPORTS BY INSURERS
Section 836-011-0024 - Contents of Corporate Governance Annual Disclosure
Universal Citation: OR Admin Rules 836-011-0024
Current through Register Vol. 63, No. 9, September 1, 2024
(1) The insurer or insurance group shall be as descriptive as possible in completing the CGAD, with inclusion of attachments or example documents that are used in the governance process, since these may provide a means to demonstrate the strengths of their governance framework and practices.
(2) The CGAD shall describe the insurer's or insurance group's corporate governance framework and structure including consideration of the following.
(a) The Board and various committees thereof
ultimately responsible for overseeing the insurer or insurance group and the
level(s) at which that oversight occurs (e.g. ultimate control level,
intermediate holding company, legal entity, etc.). The insurer or insurance
group shall describe and discuss the rationale for the current Board size and
structure; and
(b) The duties of
the Board and each of its significant committees and how they are governed
(e.g. bylaws, charters, informal mandates, etc.), as well as how the Board's
leadership is structured, including a discussion of the roles of Chief
Executive Officer (CEO) and Chairman of the Board within the
organization.
(3) The insurer or insurance group shall describe the policies and practices of the most senior governing entity and significant committees thereof, including a discussion of the following factors.
(a) How
the qualifications, expertise and experience of each Board member meet the
needs of the insurer or insurance group.
(b) How an appropriate amount of independence
is maintained on the Board and its significant committees.
(c) The number of meetings held by the Board
and its significant committees over the past year as well as information on
director attendance.
(d) How the
insurer or insurance group identifies, nominates, and elects members to the
Board and its committees. The discussion should include, for example:
(A) Whether a nomination committee is in
place to identify and select individuals for consideration.
(B) Whether term limits are placed on
directors.
(C) How the election and
re-election processes function.
(D)
Whether a Board diversity policy is in place and if so, how it
functions.
(e) The
processes in place for the Board to evaluate its performance and the
performance of its committees, as well as any recent measures taken to improve
performance (including any Board or committee training programs that have been
put in place).
(4) The insurer or insurance group shall describe the policies and practices for directing Senior Management, including a description of the following factors:
(a) Any processes or practices (i.e.
suitability standards) to determine whether officers and key persons in control
functions have the appropriate background, experience and integrity to fulfill
their prospective roles, including:
(A)
Identification of the specific positions for which suitability standards have
been developed and a description of the standards employed.
(B) Any changes in an officer's or key
person's suitability as outlined by the insurer's or insurance group's
standards and procedures to monitor and evaluate such
changes.
(b) The insurer's
or insurance group's code of business conduct and ethics, the discussion of
which considers, for example:
(A) Compliance
with laws, rules and regulations; and
(B) Proactive reporting of any illegal or
unethical behavior.
(c)
The insurer's or insurance group's processes for performance evaluation,
compensation and corrective action to ensure effective senior management
throughout the organization, including a description of the general objectives
of significant compensation programs and what the programs are designed to
reward. The description shall include sufficient detail to allow the director
to understand how the organization ensures that compensation programs do not
encourage and/or reward excessive risk taking. Elements to be discussed may
include, for example:
(A) The Board's role in
overseeing management compensation programs and practices.
(B) The various elements of compensation
awarded in the insurer's or insurance group's compensation programs and how the
insurer or insurance group determines and calculates the amount of each element
of compensation paid;
(C) How
compensation programs are related to both company and individual performance
over time.
(D) Whether compensation
programs include risk adjustments and how those adjustments are incorporated
into the programs for employees at different levels.
(E) Any claw back provisions built into the
programs to recover awards or payments if the performance measures upon which
they are based are restated or otherwise adjusted.
(F) Any other factors relevant in
understanding how the insurer or insurance group monitors its compensation
policies to determine whether its risk management objectives are met by
incentivizing its employees.
(d) The insurer's or insurance group's plans
for CEO and Senior Management succession.
(5) The insurer or insurance group shall describe the processes by which the Board, its committees and Senior Management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer's business activities, including a discussion of:
(a) How oversight and management
responsibilities are delegated between the Board, its committees and Senior
Management.
(b) How the Board is
kept informed of the insurer's strategic plans, the associated risks and steps
that Senior Management is taking to monitor and manage those risks.
(c) How reporting responsibilities are
organized for each critical risk area. The description should allow the
director to understand the frequency at which information on each critical risk
area is reported to and reviewed by Senior Management and the Board. This
description may include, for example, the following critical risk areas of the
insurer:
(A) Risk management processes (An
ORSA Summary Report filer may refer to its ORSA Summary Report pursuant to ORS
732.662).
(B) Actuarial function
(C) Investment decision-making
processes
(D) Reinsurance
decision-making processes
(E)
Business strategy/finance decision-making processes
(F) Compliance function
(G) Financial reporting/internal auditing;
and
(H) Market conduct
decision-making processes.
Statutory/Other Authority: ORS 731.244
Statutes/Other Implemented: 2017 Oregon Laws, Chapter 479, Section 5 (Enrolled Senate Bill 97)
Disclaimer: These regulations may not be the most recent version. Oregon may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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