Utah Administrative Code
Topic - Insurance
Title R590 - Administration
Rule R590-284 - Corporate Governance Annual Disclosure Rule
Section R590-284-5 - Contents of the CGAD
Universal Citation: UT Admin Code R 590-284-5
Current through Bulletin 2024-06, March 15, 2024
(1) An insurer or insurance group shall provide thorough descriptions in the CGAD and shall include any existing document used in the governance process to demonstrate the strengths of the insurer's or insurance group's governance framework and practices.
(2) The CGAD shall describe an insurer's or insurance group's corporate governance framework and structure, including consideration of the following:
(a) the insurer's board of directors and its
committees that are responsible for overseeing the insurer or insurance
group;
(b) the level or levels at
which oversight occurs, including ultimate control level, intermediate holding
company, or legal entity;
(c) the
rationale for the current size and structure of the board of directors,
including the role of the chief executive officer and the chairman of the
board;
(d) the duties of the board
of directors and each committee; and
(e) how the board of directors and each
committee is governed, for example through bylaws, a charter, or an informal
mandate.
(3) An insurer or insurance group shall describe the policies and practices of the most senior governing entity and its committees, including:
(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 of directors and its
committees;
(c) the number of
meetings held by the board of directors and its 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 of directors and its
committees, including:
(i) whether a
nomination committee is in place to identify and select individuals for
consideration;
(ii) whether term
limits are placed on directors;
(iii) how the election and re-election
processes function; and
(iv)
whether a board of directors diversity policy is in place and, if so, how it
functions; and
(e) the
processes in place for the board of directors to evaluate its performance and
the performance of its committees, as well as any recent measures taken to
improve performance, including board of directors or committee training
programs.
(4) An insurer or insurance group shall describe the policies and practices for directing senior management, including:
(a) any process
or suitability standards used to determine whether an officer or key person in
a control function has the appropriate background, experience, and integrity to
fulfill their role, including:
(i)
identification of each specific position for which suitability standards have
been developed and a description of the standards employed; and
(ii) any change 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, including:
(i) compliance with laws, rules, and
regulations; and
(ii) 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:
(i) the general objectives of any significant
compensation program;
(ii) what
each program is designed to reward; and
(iii) how the organization ensures that a
compensation program does not encourage or reward excessive risk taking,
including:
(A) the role of the board of
directors in overseeing management compensation programs and
practices;
(B) the elements of
compensation awarded in each compensation program and how the insurer or
insurance group determines and calculates the amount of each element of
compensation paid;
(C) how each
compensation program is related to both company and individual performance over
time;
(D) whether each compensation
program includes risk adjustments and how those adjustments are incorporated
into the programs for employees at different levels;
(E) any clawback provision built into a
compensation program to recover awards or payments if the performance measures
they are based on are restated or adjusted; and
(F) any other factor 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; and
(d) the insurer's or insurance group's plans
for chief executive officer and senior management succession.
(5)
(a) An insurer or insurance group shall
describe any process used by the board of directors, its committees, or senior
management to ensure appropriate oversight of each critical risk area impacting
the insurer's or insurance group's business activities, including:
(i) how oversight and management
responsibilities are delegated between the board of directors, its committees,
and senior management;
(ii) how the
board of directors is kept informed of the insurer's or insurance group's
strategic plans, the associated risks, and steps that senior management takes
to monitor and manage those risks; and
(iii) how reporting responsibilities are
organized for each critical risk area.
(b) The description shall inform the
commissioner of the frequency at which information on each critical risk area
is reported to and reviewed by senior management and the board of
directors.
(c) The description may
include the following critical risk areas of the insurer:
(A) a risk management process, such as an
ORSA Summary Report pursuant to Title 31A, Chapter 16a, Risk Management and Own
Risk and Solvency Assessment Act;
(B) an actuarial function;
(C) an investment decision-making
process;
(D) a reinsurance
decision-making process;
(E) a
business strategy or finance decision-making process;
(F) a compliance function;
(G) a financial report or internal audit; and
(H) a market conduct decision-making process.
Disclaimer: These regulations may not be the most recent version. Utah 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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