Insurers and other Office of the Insurance Commissioner (OIC)-regulated companies should be aware of several new requirements that went into effect January 1, 2019.
Corporate governance annual disclosure reports
Washington adopted the NAIC corporate governance annual disclosure (CGAD) model act and regulation during calendar year 2018.
The purpose of RCW chapter 48.195 is to:
Provide the insurance commissioner a summary of an insurer or insurance group's corporate governance structure, policies, and practices to permit the commissioner to gain and maintain an understanding of the insurer's corporate governance framework;
Outline the requirements for completing a corporate governance annual disclosure with the commissioner; and
Provide for the confidential treatment of the corporate governance annual disclosure and related information that will contain confidential and sensitive information related to an insurer or insurance group's internal operations and proprietary and trade secret information which, if made public, could potentially cause the insurer or insurance group competitive harm or disadvantage.
This chapter applies to all insurers as defined under RCW 48.31B.005 and domiciled in this state.
Washington’s adopted CGAD rules (WAC chapter 284-07-700 through 740) are consistent with the NAIC CGAD model rule. Content requirements for the annual disclosure reports are found under WAC 284-07-730.
Washington domestic insurers (including health carriers) are required to file their initial CGAD report due June 1 of each year. Domestic insurers are to file their corporate governance annual disclosure reports through the OIC filing portal account.
The CGAD report must describe the insurer's or insurance group's corporate governance framework and structure, the board and various committees that are ultimately responsible for overseeing the insurer or insurance group, and the level(s) at which that oversight occurs.
The report must describe and discuss the rationale for the current board size and structure, 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, and discussion of the roles of chief executive officer (CEO) and chairman of the board within the organization.
The report must also describe the policies and practices of the most senior governing entity and significant committees, as well as a discussion of a variety of topics and factors listed in the rule such as: corporate structure and its governance; policies and practices for directing senior management; and
The report must 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.
For more information, contact:
Company Supervision Division
Washington State Office of the Insurance Commissioner
Insurance 5000 Building
P.O. Box 40255
Olympia, WA 98504-0255