Insurance-corporate governance annual disclosure.

2016
State of Wyoming
16LSO-0090
Introduced
1.2

HOUSE BILL

NO.

HB0034

Insurance-corporate governance annual disclosure.

Sponsored by:
Joint Corporations, Elections & Political Subdivisions Interim Committee

A BILL

for

AN ACT relating to insurance; requiring insurance companies, fraternal benefit societies and health maintenance organizations to submit a governance report as specified; providing filing requirements; providing for the confidentiality of information reported; specifying applicability; authorizing rules and regulations; providing penalties; and providing for an effective date.

Be It Enacted by the Legislature of the State of Wyoming:

Section
1
.

W.S.
26
‑
29
‑
239, 26
‑
34
‑
135 and
26
‑
52
‑
101 through
26
‑
52
‑
108

are
created to read:

26
‑
29
‑
239
.

Application of Wyoming Corporate Governance Annual Disclosure Act.

The Wyoming Corporate Governance Annual Disclosure Act, title 26, chapter 52, shall apply to
domestic
fraternal benefit societies regulated under this chapter.

26
‑
34
‑
135
.

Application of Wyoming Corporate Governance Annual Disclosure Act.

The Wyoming Corporate Governance Annual Disclosure Act, title 26, chapter 52, shall apply to
domestic health maintenance organizations licensed
under this chapter.

CHAPTER 52
CORPORATE GOVERNANCE ANNUAL DISCLOSURE

26
‑
52
‑
101
.

Short title; a
pplicability
.

(a)

This
chapter
constitutes the Wyoming Corporate Governance Annual Disclosure Act.

(b
)

The requirements of this
chapter
shall apply to all insurers domiciled in this state.

(c
)

Nothing in this
chapter
shall be construed to prescribe or impose corporate governance standards and internal procedures beyond that which is required under applicable state corporate law.

(d
)

N
othing in this
chapter
s
hall be construed to limit the c
ommissioner
'
s authority, or the rights or obligations of third parties,
pursu
ant to the Wyoming

I
nsurance
C
ode.

(e
)

No insurer or group of insurers shall be required to file the disclosure required by this
chapter
until
2017.

26
‑
52
‑
102
.

Definitions.

(a)

As used in this chapter:

(i
)

"
Corporate governance annual disclosure
"
or

"
CGAD
"
means a
confidential report filed by an
insurer or insurance group in accordance wi
th the requirements of this
chapter
;

(ii
)

"
Insurance group
"
means those insurers and affiliates included within an insurance holding company system as defined
under

W.S. 26
‑
44
‑
101(
a)(iv);

(iii
)

"
Insurer
"

shall have the same meaning as set forth
under

W.S.

26
‑
1
‑
102(a)(xvi)
, except that it shall not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or p
olitical subdivision of a state
.

26
‑
52
‑
103
.

Disclosure

r
equirement.

(a)

An insurer, or the insurance group of which the insurer is a member, shall, no later than June 1 of eac
h calendar year, submit to the commissioner a corporate governance annual disclosure
that contain
s the information described in
W.S.
26
‑
52
‑
105
. N
otwithstanding any request from the
c
ommissioner made pursuant to s
ubsection
(c)
of this section
, if the insurer is a member of an insurance group, the insurer shall submit the report required by this
s
ection to the
c
ommissioner of the lead state for the insurance group, in accordance
with the laws of the lead
state and

under the guidance of the
procedures outlined in the most recent
f
inancial
a
nalysis
h
andbook adopted by the
National Association of Insurance Commissioners.

(b)

The CGAD shall
include a signature of the insurer
'
s
or insurance group
'
s chief executive officer or

corporate secretary attesting to the best of that individual
'
s belief and knowledge that the insurer has implemented the corporate governance practices
disclosed pursuant to subsection (a) of this section
and that a copy of the disclosure has been provided to the insurer
'
s board of directors or the appropriate committee thereof.

(c)

An insurer not required to submit a CGAD under thi
s section shall do so upon the c
ommissioner
'
s request.

(d)

For purposes of completing the CGAD, the insurer or insurance group may provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance.

The insurer or insurance group is
encouraged to make the CGAD disclosures at the level at which the insurer
'
s or insurance group
'
s risk appetite is determined, or at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed.

If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three
(3)
criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.

(e)

The review of the CGAD and any additional requests for information shall be made through the lead state
under the guidance of
the procedures within the most recent
f
inancial
a
nalysis
h
andbook referenced in
subsection

(a)
of this section.

(f)

Insurers providing information substantially similar to the information required by this
a
ct in o
ther documents provided to the c
ommissioner, including proxy statements filed
pursuant to W.S. 26
‑
44
‑
104
, or other state
or federal
filings provided to
the
d
epartment
,
shall not be required to duplicate that information in the CGAD, but shall be required to cross reference
and identify

where the document may be located by the commissioner.

26
‑
52
‑
104
.

Rules and r
egulations.

The
c
ommissioner may
promulgate
rules, regulations and orders necessary to carry out the provisions of this
a
ct.

26
‑
52
‑
105
.

Contents
of corporate governance annual
d
isclosure.

(a)

An
insurer or insurance group shall have discretion

over the responses to the CGAD inquiries, provided the CGAD shall contain the material infor
mation necessary to permit the c
ommissioner to gain an understanding of the insurer
'
s or group
'
s corporate governance structure, policies and practices. The
c
ommissioner may request additional information
deemed
materia
l and necessary to provide the c
ommissioner with a clear understanding of
corporate governance policies and

the reporting
, i
nformation system
s
or controls
used to
implement those policies.

(b)

Notwithstanding s
ubsection
(a)
of this section, the CGAD shall
be prepared consistent with

corporate governance annual disclosure model regulations adopted in the department
'
s rules
.
Pursuant to the guidance in the model regulation, the CGAD shall describe the insurer
'
s or insurance group
'
s corporate governance framework, the policies and practices of the most senior governing entity and significant committees thereof, the policies and practices for directing senior management and the processes by which the board and senior management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer
'
s business activities.
Documentation and supporting information shall be ma
intained and made available for
examination
or
upon request of the
c
ommissioner.

26
‑
52
‑
106
.

Confidentiality.

(a)

Documents, materials or other information
,
including the CGAD
,
in the possession or control of the
d
epartment of
i
nsurance that are obtained by, created by or disclosed to the
c
ommissioner or any other person under this
chapter
, are recognized by this state as being proprietary and to contain trade secrets.

All such documents, materials or other information shall be confidential by law and privileged, shall not be
considered public records pursuant to W.S. 16
‑
4
‑
201 through 16
‑
4
‑
205,
shall not be subject to subpoena, and shall not be subject to discovery or admissible
as
evidence in any private civil action.

T
he c
ommissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal a
ction brought as a part of the c
ommissioner
'
s official duties.

The c
ommissioner shall not otherwise make the documents, materials or other information public without the prior written consent of the insurer.

Nothing in this section shall be construed to require written con
sent of the insurer before the c
ommissioner may share or receive confidential documents, materials or other CGAD

related information pursuant to
s
ubsection
(c)
of this section and as necessary
to as
sist in the performance of the c
ommissioner
'
s regular duties.

(b)

Neither the c
ommissi
oner nor any person who receives
documents, materials or other CGAD

related information, through examination or otherwise, while acting under the authority of the
c
ommissioner, or with whom such documents, materials or other information are shared pursuant to this
chapter
,
shall be permitted or required to testify in any private civil action concerning any co
nfidential documents, materials
or information subject to
s
ubsection
(a)
of this section
.

(c)

In order to assist in the performance of the
c
ommissioner
'
s regulatory duties, the
c
ommissioner:

(i)

May, upon request
, share documents, materials or other CGAD

related informatio
n including
confidential and privileged documents, materials or information subject to
s
ubsection
(a)
, including proprietary and trade secret documents and materials
,
with other state, federal and international financial regulatory agencies, including members of any super
visory college as defined
under
W.S. 26
‑
44
‑
118
, with the N
ational Association of Insurance Commissioners,
and with third party consultants pursuant to
W.S. 26
‑
52
‑
107
, provided that the
recipient agrees in writing to maintain the confidentiality and privileged status of the CGAD

related documents, material or other information and has verified in writing the legal authority to maintain confidentiality; and

(ii)

May receive documents, materials or other CGAD

related information, including otherwise confidential and privileged documents, materials or information, including proprietary and trade

secret information or documents, from regulatory officials of other state, federal and international financial regulatory agencies, including members of any super
visory college as defined
under
W.S. 26
‑
44
‑
118
, and from
the National Association of Insurance Commissioners
, and shall maintain as confidential or privileged any documents, materials or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information.

(d)

The sharing of information and documents by the
c
ommissioner pursuant to this
chapter
shall not constitute a delegation of regulatory authority or rulemaking, and the
c
ommissioner is solely responsible for the administration, execution and enforcement of the provisions of this
chapter
.

(e)

No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade

secret materials or other CGAD

related information shall occur as a result of disclosure of such CGAD

related information or documents to the
c
ommissioner under this section or as a result of
any
sharing
authorized by
this
chapter
.

26
‑
52
‑
107
.

NAIC and
third

party c
onsultants.

(a)

The
c
ommissioner may retain, at the insurer
'
s expense, third

party consultants, including attorneys, actuaries, accountants and other experts not otherwise a part of the
c
ommissioner
'
s staff as may be reasonably necessary to assist the
c
ommissioner in reviewing the CGAD and related information or the insurer
'
s compliance with this
chapter
.

(b)

Any person
retained under
s
ubsection
(a)
of this section
shall be under the direction and control of the
c
ommissioner and shall act
only
in a
n
advisory capacity.

(c)

The National Association of Insurance Commissioners and any
person retained pursuant to subsection (a) of this section
shall be subject to the same confidentiality standards and requirements as the
c
ommissioner.

(d)

Any person retained pursuant to
subsection (a) of this section

shall verify to the
c
ommissioner, with notice to the insurer, that it is free of a conflict of interest and that it has internal procedures in place to monitor compliance with a conflict and to comply with the confidentiality standards and requirements of this
chapter
.

(e)

The commissioner shall enter into a written agreement with
the National Association of Insurance Commissioners and
any person hired pursuant to subsection (a) of this section
concerning the sharing and use of information provided under this
chapter
. The agreement
shall
contain the following provisions and expressly
require the written consent of the insurer prior to making public
any
information provided under this
chapter
:

(i)

Specific procedures and protocols for maintaining the confidentiality and security of CGAD

related information

shared with the National Association of Insurance Commissioners or any person hired pursuant to subsection (a) of this section
;

(ii)

Procedures and protocols for
the
N
ational
A
ssociation of
I
nsurance
C
ommissioners
'
disclosure of CGAD

related information
only
to
other state reg
ulators from states in which an
insurance group has domiciled insurers.

The agreement shall provide that the
recipient
agree
s
in writing
to maintain the confidentiality and privileged status of the CGAD

related documents, mat
erials or other information and has
verified in writing the legal author
ity to maintain confidentiality;

(iii)

A provision
specifying that ownership of
CGAD

related information shared with
the National Association of Insurance Commissioners or
a person retained pursuant to subsection (a) of this section
remains with the
d
epartment of
i
nsurance and

use of the information by the National Association of Insurance Commissioners or a person retained pursuant to subsection (a) of this section
is subject to the direction of the
c
ommissioner;

(iv)

A
provision that prohibits
the National Association of
Insurance Commissioners or
any
person retained pursuant to subsection (a) of this section
from storing the information shared pursuant to this
chapter
in a permanent database after the
underlying analysis is completed;

(v)

A provision requiring
the National Associatio
n of Insurance Commissioners or
any
person retained pursuant to subsection (a) of this section
to provide prompt notice to the
c
ommissioner and to the insurer or insurance group
upon the receipt of
any subpoena, request for disclosure, or request for production of the insurer
'
s CGAD

related information; and

(vi)

A requirement that
the National Associatio
n of Insurance Commissioners or
any
person retained pursuant to sub
section (a) of this section shall

consent to
intervention by an insurer in any judicial or administrative action in which
the National Association of Insurance Commissioners or the
person retained pursuant to subsection (a) of this section
may be required to disclose confidential information
about the insurer
shared with the National Association of Insurance Commissioners or a person retained pursuant to subsection (a) of this section pursuant to this
chapter
.

26
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52
‑
108
.

Sanctions.

Any insurer failing, without just cause, to timely file the CGAD
required by
this
chapter
shall be required, after notice and hearing, to pay a penalty of
one hundred dollars ($100.00)

for each
day that the CGAD is not filed
, to be recovered by the
c
ommissioner
.
The maximum penalty
due

under this section
shall be
five thousand dollars ($5,000.00)
. The
c
ommissioner may reduce the penalty if the insurer demonstrates to the
c
ommissioner that the imposition of the penalty would constitute a financial hardship to the insurer.

Section
2
.

This act is effective July 1, 2016.

(END)

1
HB0034