Haw. Code R. § 16-186-104 - Contents of corporate governance annual disclosure
Current through October, 2021
(a) The
insurer or insurance group shall be descriptive as possible in completing the
corporate governance annual disclosure, 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.
(b) The corporate
governance annual disclosure shall describe the insurer's or insurance group's
corporate governance framework and structure including consideration of the
following:
(1) The board and various committees
thereof ultimately responsible for overseeing the insurer or insurance group and
the level at which that oversight occurs, such as the ultimate control level, an
intermediate holding company level, or an individual legal entity level. The
insurer or insurance group shall describe and discuss the rationale for the
current board size and structure; and
(2) The duties of the board and each of its
significant committees and how they are governed, such as bylaws, charters, or
informal mandates, as well as how the board's leadership is structured, including
a discussion of the roles of the chief executive officer and chairman of the
board within the organization.
(c) 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:
(1) How the qualifications, expertise, and
experience of each board member meet the needs of the insurer or insurance
group;
(2) How an appropriate amount
of independence is maintained on the board and its significant
committees;
(3) The number of
meetings held by the board and its significant committees over the past year as
well as information on director attendance;
(4) 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; and
(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).
(d) The insurer or insurance group shall
describe the policies and practices for directing senior management, including a
description of the following factors:
(1) 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; and
(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;
(2) The insurer's
or insurance group's code of business conduct and ethics, the discussion of which
considers, for example:
(A) Compliance with
statutes and rules; and
(B) Proactive
reporting of any illegal or unethical behavior;
(3) 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 commissioner to understand how the organization
ensures that compensation programs do not encourage 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 clawback 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 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.
(4) The
insurer's or insurance group's plans for chief executive officer and senior
management succession.
(e)
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:
(1) How oversight and
management responsibilities are delegated between the board, its committees, and
senior management;
(2) 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;
(3) How reporting
responsibilities are organized for each critical risk area. The description
should allow the commissioner 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 areas of
the insurer:
(A) An insurer, or the insurance
group of which the insurer is a member, may refer to its Own Risk and Solvency
Assessment Summary Report pursuant to Article 3D, Risk Management and Own Risk
and Solvency Assessment Model Act;
(B) Actuarial function;
(C) Investment decision-making
processes;
(D) Reinsurance
decision-making processes;
(E)
Business strategy and finance decision-making processes;
(F) Compliance function;
(G) Financial reporting and internal auditing;
and
(H) Market conduct
decision-making processes.
Notes
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