Corporate Governance Annual Disclosure Model (CGAD) Law and Regulation
05/05/2016
HEALTH PLAN ALLIANCE
Joint Bulletin
Corporate Governance Annual Disclosure Model (CGAD) Law and Regulation – FIVE STATES HAVE JUNE 1, 2016 FILING DATE
The states with a June 1, 2016 filing requirement are California, Iowa, Indiana, Louisiana and Vermont. If you have a company domiciled in any of these states, you will need to file the CGAD this June only in your state of domicile. Your Company will file the CGAD with the financial examiner in your domestic state. Contact your examiner with any questions.
The NAIC adopted the Corporate Governance Annual Disclosure Model (CGAD) Law and Regulation at their November 2014 Fall Meeting in Washington, D.C. The CGAD models are part of the NAIC accreditation process so these models will be adopted without variations. We expect that 35-40 states will adopt this model in 2016-2017 legislative season.
OTHER STATES HAVE TAKEN ACTION ON THE CGAD MODEL
Nebraska, Florida, and Indiana have adopted the model with a June 1, 2017 filing date.
The following states have proposed the CGAD with a June 1, 2017 filing date: Connecticut, New Hampshire, Ohio, Rhode Island and Wyoming. We anticipate that 30-35 states will have adopted the Models by the end of 2017.
CGAD REPORT REQUIREMENTS
The CGAD models differ from ORSA (Own Risk and Solvency Assessment) in that there is no premium threshold minimum for applicability of the law. The NAIC has made an affirmative decision not to exempt small companies or fraternal societies from any of these new corporate governance requirements.
The CGAD model provides a Guidance Manual (contact us for a copy of the free NAIC Guidance Manual), but does not provide a checklist or a sample report. However, First Consulting now delivers a CGAD Report Template in the Corporate Governance Tool Kit Supplement.
Under the models, insurers will need to provide detailed information in a narrative report in these strategic areas:
- Corporate Governance framework and structure - the insurer's governance structure and framework, including specific information regarding board size, as well as the role of the president/CEO and board chair will need to be articulated. Does the board, as a whole, possess all of what the NAIC calls "core competencies?"
- Board of directors' policies and procedures - the insurer must provide specific information regarding how the qualifications, expertise and experiences of board members meet the needs of the insurer; how independence is maintained; how often the board meets and whether board members participate in all scheduled meetings. The board will need to create "suitability standards" (position descriptions) for officers and key persons in control functions.
- Senior management policies and procedures - the company charter or other board documents must clearly articulate the responsibilities of the directors. Corporate governance guidelines must document established key governance principles and be available for regulator review.
- Oversight of critical risk areas - reports from each critical risk area must be reviewed by senior management and the board with a documented frequency, which regulators must determine to be sufficient.
ALLIANCE AND FIRST CONSULTING RESOURCES
In an effort to help Alliance members better understand what they need to do to comply with the requirements under the CGAD models, Associate Member First Consulting is offering CGAD webinars for Alliance Members:. Register here.
The American Fraternal Alliance has secured special discount prices for its members to purchase First Consulting's four BUDGET-FRIENDLY KITS FOR COMPLIANCE READINESS! These Compliance Kits contain templates and tools to address the requirements of CGAD as listed above.
Corporate Governance Tool Kit and Supplement
The NEW Corporate Governance Tool Kit Supplement contains a CGAD Report Template to help you file the disclosure which requires a narrative plus documentation as attachments.
SPECIAL ALLIANCE MEMBER PRICING: CONTACT CJ, CAROL or JAIME FOR A QUOTE AND WE CAN SET UP A GOTOMEETING TO SHOW YOU THE KITS AND THEIR TOOLS AND TEMPLATES.
Value Added! You can sign up for the free First Consulting's Corporate Governance Update monthly email, which provides news of proposed and adopted laws and regulations.
Please contact either of the First Consulting representatives with any questions.
Senior Consultant
First Consulting & Administration, Inc.
Carol.Stern@FirstConsulting.com
816.391.2746
C.J. Rathbun, FLMI, CCEP, HIA, AIRC
Senior Consultant
First Consulting & Administration, Inc.
Cj.rathbun@firstconsulting.com
816.391.2740
Jaime G. González, DrPH, MSSW, MSHA
Chief Financial Officer/ Business Development Officer
Health Plan Alliance
290 E. John Carpenter Freeway
Irving, TX 75062-2710
O: 972-830-6355