New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter IV - Financial Condition Of Insurer and Reports to Superintendent › Subchapter B - Life Insurers › Part 90 - Corporate Governance › Section 90.3 - Corporate governance annual disclosure

Current through Register Vol. 46, No. 28, July 10, 2024
(a)
(1) An
				  insurer shall submit electronically to the superintendent by December 1, 2020 a
				  corporate governance annual disclosure applicable to the insurer and the
				  holding company system, article 16 system, or article 17 system of which it is
				  a member. The insurer also shall submit to the superintendent one hard copy of
				  the corporate governance annual disclosure in 2020. Starting in 2021, the
				  insurer shall file by June 1 of each year an amended version of its previously
				  submitted corporate governance annual disclosure indicating in the disclosure,
				  using tracked changes, where the insurer made changes. The insurer also shall
				  file a copy of the amended disclosure without any tracked changes shown. If the
				  insurer did not make any changes, then the insurer shall file with the
				  superintendent the corporate governance annual disclosure filed with the
				  superintendent the previous year and shall state that the insurer did not make
				  any changes. An insurer shall maintain and make available documentation and
				  supporting information upon examination or upon the superintendent's
				  request.
(2) An insurer may comply
				  with paragraph (1) of this subdivision by submitting to the superintendent the
				  most recent and substantially similar corporate governance annual disclosure or
				  disclosures provided by the insurer or another member of the insurer's holding
				  company system, article 16 system, or article 17 system to the head insurance
				  regulator of another state or to a supervisor or regulator of a foreign
				  jurisdiction, if the corporate governance disclosure or disclosures provide
				  information that is comparable to the information described in this section. A
				  report in a language other than English shall be accompanied by a certified
				  translation of the report into English.
(3) An insurer shall make the corporate
				  governance annual disclosure at the level at which:
(i) the insurer's or system's risk appetite
				  is determined;
(ii) the insurer's
				  earnings, capital, liquidity, operations, and reputation are overseen
				  collectively and at which the supervision of these factors is coordinated and
				  exercised; or
(iii) legal
				  responsibility for failure of general corporate governance duties would be
				  placed. The insurer shall indicate in the corporate governance annual
				  disclosure which of the criteria set forth in subparagraphs (i) through (iii)
				  of this paragraph were used to determine the level of disclosure and explain
				  any subsequent changes in the level of disclosure.
(4) The corporate governance annual
				  disclosure shall describe the corporate governance framework, including a
				  description of:
(i) the board of directors,
				  or other governing body, and various committees thereof, ultimately responsible
				  for overseeing the insurer or system, and the level or levels at which that
				  oversight occurs;
(ii) the
				  rationale for the current size and structure of the board of directors or other
				  governing body;
(iii) the duties of
				  the board of directors, or other governing body, and of each of its significant
				  committees, and the way in which they are governed;
(iv) the way in which the board of
				  directors', or other governing body's, leadership is structured, including a
				  discussion of the roles of chief executive officer and chairperson of the board
				  of directors, or other governing body;
(v) the policies and practices of the most
				  senior governing entity and significant committees thereof, including a
				  discussion of the following factors:
(a) the
				  way in which the qualifications, expertise, and experience of each member of
				  the board of directors, or other governing body, meet the needs of the insurer
				  or system;
(b) the way in which an
				  appropriate amount of independence is maintained on the board of directors, or
				  other governing body, and its significant committees;
(c) the number of meetings held by the board
				  of directors, or other governing body, and its significant committees over the
				  past year, as well as information about attendance at the meetings;
(d) the way in which the insurer or system
				  identifies, nominates, and elects members to the board of directors, or other
				  governing body, and its committees, including whether a nomination committee is
				  in place to identify and select individuals for consideration, whether term
				  limits are placed on members of the board of directors or other governing body,
				  how the election and re-election processes function, whether there is a
				  diversity policy in place and if so, the way in which the diversity policy
				  functions;
(e) the processes in
				  place for the board of directors, or other governing body, to evaluate its
				  performance and the performance of its committees, as well as any recent
				  measures taken to improve performance, including any training programs that
				  have been put in place;
(f) the way
				  in which the insurer or system ensures that members of the board of directors,
				  or other governing body, comply with the duty to act in good faith and in a
				  manner that the members believe to be in the best interests of the insurer or
				  system;
(g) the way in which the
				  insurer or system ensures that members of the board of directors, or other
				  governing body, comply with the duty to discharge their duties with the care
				  that a person in a like position reasonably would believe to be appropriate
				  under similar circumstances;
(h)
				  the reporting or information system or controls that the insurer or system has
				  implemented to enable members of the board of directors, or other governing
				  body, to carry out their duties; and
(i) the way in which the insurer or system,
				  having implemented a reporting or information system or controls, ensures that
				  the members of the board of directors, or other governing body, do not
				  consciously fail to monitor or oversee the insurer's or system's operations
				  thereby disabling itself from being informed of risks or problems requiring
				  their attention;
(vi)
				  the policies and practices for directing senior management, including a
				  description of the following factors:
(a) any
				  suitability standards used to determine whether officers and key persons in
				  control functions have the appropriate background, experience, and integrity to
				  fulfill their prospective roles, identification of the specific positions for
				  which suitability standards have been developed and a description of the
				  standards employed, and any changes in an officer's or key person's suitability
				  as outlined by the insurer's or system's standards and procedures to monitor
				  and evaluate the changes;
(b) the
				  insurer's or system's code of business conduct and ethics, the discussion of
				  which considers compliance with laws, rules, and regulations, and proactive
				  reporting of any illegal or unethical behavior;
(c) the insurer's or system'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 superintendent to understand the way in which the insurer or system
				  ensures that compensation programs do not encourage or reward excessive risk
				  taking. Elements that shall be discussed include:
(1) the role of the board of directors, or
				  other governing body, in overseeing management compensation programs and
				  practices;
(2) the various elements
				  of compensation awarded in the insurer's or system's compensation programs and
				  the way in which the insurer or system determines and calculates the amount of
				  each element of compensation paid;
(3) the way in which compensation programs
				  are related to both business entity and individual performance over
				  time;
(4) whether compensation
				  programs include risk adjustments and the way in which those adjustments are
				  incorporated into the programs for employees at different levels;
(5) any clawback provisions built into the
				  programs to receive awards or payments if the performance measures upon which
				  they are based are restated or otherwise adjusted; and
(6) any other factors relevant in
				  understanding how the insurer or system monitors its compensation policies to
				  determine whether its risk management objectives are met by incentivizing its
				  employees; and
(d) the
				  insurer's or system's plans for senior management succession; and
(vii) the processes by which the
				  board of directors, or other governing body, its committees, and senior
				  management ensure an appropriate amount of oversight of the critical risk areas
				  affecting the insurer's business activities, including a discussion of the way
				  in which:
(a) oversight and management
				  responsibilities are delegated between the board of directors, or other
				  governing body, its committees, and senior management;
(b) the board of directors, or other
				  governing body, is kept informed of the insurer's or system's strategic plans,
				  the associated risks, and steps that senior management is taking to monitor and
				  manage those risks; and
(c)
				  reporting responsibilities are organized for each critical risk area. The
				  description shall specify the frequency with which information on each critical
				  risk area is reported to and reviewed by senior management and the board of
				  directors, or other governing body. This description shall include the
				  following critical risk areas:
(1) risk
				  management processes;
(2) actuarial
				  function;
(3) investment
				  decision-making processes;
(4)
				  reinsurance decision-making processes;
(5) business strategy and financial
				  decision-making processes;
(6)
				  compliance function;
(7) financial
				  reporting and internal auditing; and
(8) market conduct decision-making
				  processes.