Wisconsin Administrative Code › Office of the Commissioner of Insurance › Chapter Ins 53 - Corporate Governance Annual Disclosures › Section Ins 53.04 - Contents of the corporate governance annual disclosure

Current through June 24, 2024
(1) The insurer or
			 insurance group shall be as 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.
(2) The corporate
			 governance annual disclosure shall describe the insurer's or insurance group's
			 corporate governance framework and structure including consideration of all of
			 the following:
(a) The board and its various
			 committees that are ultimately responsible for overseeing the insurer or
			 insurance group and the level at which oversight occurs, for example, the
			 ultimate control level, intermediate holding company level, or legal entity
			 level. The insurer or insurance group shall describe and discuss the rationale
			 for the current board size and structure.
(b) The duties of the board and each of its
			 significant committees and how they are governed, including bylaws, charters,
			 informal mandates, as well as how the board's leadership is structured,
			 including a discussion of the roles of CEO 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 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.
5. 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 including, as an example, the 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.
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, the following:
a. Compliance with
			 laws, rules, and regulations.
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, all of the
			 following:
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 claw back 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 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.
4. The insurer's or insurance group's plans
			 for CEO 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 the following:
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 shall include the following critical risk areas of the insurer:
a. Risk management processes. An own risk and
			 solvency assessment summary report filer may refer to its assessment summary
			 report under s.
			 622.09,
			 Stats.
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.
h.
			 Market conduct decision-making processes.