Resource Center Publications | DHG Views


Corporate Governance in the Insurance Industry


In general terms, across all industries - public or private - corporate governance is simply the framework of procedures and structures that investors rely on to assure a reasonable return on their investment. Corporate governance forges the interactions between a company’s shareholders, board of directors and management, in an environment defined by the corporate charter, by laws, and matters of law. Corporate governance, though multifaceted, displays two key themes: accountability and fiduciary duty. This requires guidelines and mechanisms that ensure appropriate corporate behavior and aim to streamline economic results with an emphasis on shareholders’ welfare.

Continuous Improvement to the Regulatory Framework

The SMI is a critical self-examination of the U.S. insurance solvency regulation framework which focuses on: capital requirements; governance and risk management; group supervision; statutory accounting and financial reporting; and reinsurance. Since the establishment of the SMI, the NAIC has rolled out a number of initiatives that have created a considerable amount of added transparency into the insurer’s solvency, risks and corporate governance. Beginning in 2010, enhancements to the insurance holding company model (#440 and 2014’s iteration: #450), which created the required Form F, went into effect as early as 2013. Shortly following was the Own Risk Solvency Assessment (ORSA) Model Act adopted by the NAIC in September 2012. The most recent action taken by the NAIC was the adoption of Corporate Governance Annual Disclosure Model Act (#305) and the Corporate Governance Annual Disclosure Model Regulation (#306), collectively referred to as “CGAD.”

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Matt Howell, Partner | Insurance
646.798.3427 |

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