Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 031 - BUREAU OF INSURANCE › Chapter 165 - PRUDENTIAL STANDARDS FOR DOMESTIC RISK RETENTION GROUPS › Section 31-165-4 - Corporate Governance and Operational Standards for Domestic RRGs

Current through 2024-29, July 17, 2024
All RRGs domiciled and licensed in this State shall comply
				  with the following corporate governance and operational standards.
1.
Board of Directors
A. The RRG's board of directors shall have a
				majority of independent directors. A director does not qualify as independent
				unless the board affirmatively determines that the director has no material
				relationship with the RRG. The RRG shall review its determinations of
				independence and disclose them to the Superintendent at least annually.
(1) A director has a material relationship with the RRG if
				  the director, an immediate family member, or any business with which the
				  director is affiliated has received compensation or other valuable
				  consideration from the RRG or from any consultant or service provider to the
				  RRG, during any consecutive 12-month period, beginning within the preceding 24
				  months, that is greater than or equal to 5% of the RRG's gross written premium
				  or 2% of its surplus, as measured at the end of any fiscal quarter ending
				  within that 12-month period.
(2) A director has a material relationship with the RRG if
				  the director or animmediate family member is, or has been within the past year,
				  affiliated with or employed in a professional capacity by a present or
				  formerinternal or external auditor of the RRG.
(3) A director has a material relationship with the RRG if
				  the director or an immediate family member is, or has been within the past
				  year, employed as anexecutive officer of a business entity whose board of
				  directors or management includes any of the RRG's current executives.
(4) The relationships described in Subparagraphs (1) through
				  (3) are examples, not an exhaustive list. The board shall regard any
				  relationship that would give a reasonable person comparable or greater concerns
				  about the director's independence as a material relationship.
(5) Membership in the RRG, direct or indirect ownership of a
				  member of the RRG, or service as an employee, director, or officer of a member
				  of the RRG or the direct or indirect parent of a member of the RRG, is not
				  considered a material relationship with the RRG and therefore does not, without
				  more, disqualify someone with such a relationship with a member of the RRG from
				  serving as an independent director of the RRG.
B. If an RRG is not organized as a stock or
				mutual insurance corporation, the term "board of directors" shall refer to its
				managers, subscribers' advisory committee, or similar governing body. If an
				organization comprising the members of the RRG is the sole owner of the RRG and
				the Superintendent determines that the parent organization's board possesses
				and exercises effective control over the RRG, then the board of directors of
				the parent organization shall be considered the board of directors of the RRG
				for purposes of this Section; otherwise, both boards of directors are subject
				to all applicable requirements of this Section.
C. If the RRG is a reciprocal insurer, its
				attorney-in-fact shall adhere to the same standards regarding independence of
				operation and governance as imposed on the RRG's subscribers' advisory
				committee under this Section. The RRG's attorney-in-fact may not:
(1) Contract directly, rather than on behalf of the RRG, with
				  any service provider for services to the RRG; or
(2) Recruit, negotiate with, or make the decision to engage
				  any service provider with which the attorney-in-fact has a material
				  relationship.