Bill Summary – FastDemocracy

ENROLLED ORIGINAL

                                              AN ACT

                                         ______________

                    IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

                                  _________________________

To require insurers to file an annual report that describes the insurers or insurers groups

       corporate governance structure, policies, and practices.

       BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this

act may be cited as the Insurer Corporate Governance Annual Report Act of 2021.

        Sec. 2. Definitions.

        For the purposes of this act, the term:

                (1) Commissioner means the Commissioner of the Department of Insurance,

Securities, and Banking.

                 (2) Corporate Governance Annual Disclosure means the report filed by an

insurer or insurance group under this act.

                 (3) Insurance group means those insurers and affiliates included within an

 insurance holding company system, as defined in section 2(4) of the Holding Company System

 Act of 1993, effective October 21, 1993 (D.C. Law 10-44; D.C. Official Code  31-701(4)).

                 (4) Insurer shall have the same meaning as defined in section 2(3) of the

 Annual Audited Financial Reports Act of 1993, effective October 21, 1993 (D.C. Law 10-48;

 D.C. Official Code  31-301(3)); except, that it shall not include agencies, authorities, or

 instrumentalities of the United States, its possessions or territories, the Commonwealth of

 Puerto Rico, the District of Columbia, or a state or political subdivision of a state.

                 (5) NAIC means the National Association of Insurance Commissioners.

          Sec. 3. Applicability and scope.

          (a) This act shall apply to all insurers domiciled in the District.

          (b) Nothing in this act shall be construed to prescribe or impose corporate governance

standards and internal procedures beyond that which are required under applicable District law or

to limit the Commissioners authority, or the rights or obligations of third parties, under the Law

on Examinations, effective October 21, 1993 (D.C. Law 10-49; D.C. Official Code  31-1401 et

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seq.).

         Sec. 4. Disclosure requirement.

         (a)(1) By June 1 of each year, an insurer, or the insurance group of which the insurer is a

 member, shall submit to the Commissioner a Corporate Governance Annual Disclosure that

 contains the information required by this act, or rules issued pursuant to this act; except, that if

 the insurer is a member of an insurance group operating in the District for which the

 Department of Insurance, Securities, and Banking is not the groups primary regulator the

 insurer shall submit the Corporate Governance Annual Disclosure to the commissioner of the

 lead state for the insurance group in accordance with the laws of the lead state, as outlined in

 the most recent edition of the NAIC Financial Analysis Handbook.

                  (2) An insurer not required to submit a Corporate Governance Annual

 Disclosure to the Commissioner under this subsection shall provide a copy of the insurers

 Corporate Governance Annual Disclosure to the Commissioner upon the Commissioner's

 request.

         (b) The Corporate Governance Annual Disclosure shall include a signature of the

insurer or insurance group's chief executive officer or corporate secretary attesting, to the best of

that individuals belief and knowledge, that the insurer has implemented the corporate

governance practices described in the Corporate Governance Annual Disclosure and that a copy

of the Corporate Governance Annual Disclosure has been provided to the insurer's board of

directors or the appropriate committee of the insurer's board of directors.

          (c) For purposes of completing the Corporate Governance Annual Disclosure, 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.

         Sec. 5. Contents of Corporate Governance Annual Disclosure.

         (a)(1) The Corporate Governance Annual Disclosure shall be prepared in accordance

 with rules issued pursuant to this act and contain the material information necessary to permit

 the Commissioner to gain an understanding of the insurer's or group's corporate governance

 structure, policies, and practices.

                 (2) The Commissioner may request any additional information considered

 material to providing the Commissioner with a clear understanding of the corporate governance

 policies and the reporting or information system or controls implementing those policies.

         (b) Documentation and supporting information for the Corporate Governance Annual

 Disclosure shall be maintained by the insurer or insurance group and made available for

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examination or upon request of the Commissioner.

        Sec. 6. Confidentiality.

        (a) Documents, materials, and other information, including the Corporate Governance

Annual Disclosure, in the possession or control of the Commissioner that are obtained by,

created by, or disclosed to the Commissioner or any other person under this act shall be treated

as confidential pursuant to the standards set forth in section 8 of the Risk Management and Own

Risk Solvency Assessment Act of 2018, effective March 28, 2019 (D.C. Law 22-269; D.C.

Official Code  31-4121.07).

        (b) Documents obtained by, created by, or disclosed to the Commissioner or any other

person under this act that are already in the public domain shall not be subject to the

confidentiality provisions described in subsection (a) of this section.

        Sec. 7. NAIC and third-party consultants.

        (a) The Commissioner may disclose information received pursuant to this act to the

NAIC in reviewing the Corporate Governance Annual Disclosure and related information or in

evaluating an insurer's compliance with this act.

        (b)(1) The Commissioner may retain, at the insurer's expense, third-party consultants,

including attorneys, actuaries, accountants, and other experts not otherwise a part of the

Commissioner's staff, as may be reasonably necessary, to assist the Commissioner in reviewing

the Corporate Governance Annual Disclosure and related information or in evaluating the

insurer's compliance with this act.

                (2) The Commissioner shall have the authority to enter into a written agreement

with the NAIC or a third-party consultant governing the sharing and use of information provided

pursuant to this act. The agreement shall comply with the standards set forth in section 8(d)(2)

the Risk Management and Own Risk Solvency Assessment Act of 2018, effective March 28,

2018, (D.C. Law 22-269; D.C. Official Code  31-4121.07(d)(2)).

                (3) A third-party consultant retained pursuant to this subsection shall serve under

the direction and control of the Commissioner and shall act in an advisory capacity to the

Commissioner.

                (4) The NAIC, and third-party consultants retained pursuant to this subsection,

shall be subject to the same confidentiality standards and requirements as the Commissioner.

        (c) As part of the retention process, a third-party consultant shall verify to the

Commissioner, with notice to the insurer, that it is free of a conflict of interest and has internal

procedures in place to identify conflicts and monitor compliance with any measures taken to cure

any conflicts and to comply with the confidentiality standards and requirements of this act.

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       Sec. 8. Sanctions.

       An insurer or insurance group failing, without just cause, to timely file a Corporate

Governance Annual Disclosure as required in this act, after notice and hearing, may be fined up

to $1,000 per day, with a maximum penalty of $25,000, or have its certificate of authority

suspended, revoked, or denied renewal.

        Sec. 9. Rulemaking.

        The Commissioner may, in accordance with the District of Columbia Administrative

Procedure Act, approved October 21, 1968 (82 Stat. 1204; D.C. Official Code  2-501 et seq.),

issue rules to implement the provisions of this act.

       Sec. 10. Fiscal impact statement.

       The Council adopts the fiscal impact statement in the committee report as the fiscal

impact statement required by section 4a of the General Legislative Procedures Act of 1975,

approved October 16, 2006 (120 Stat. 2038; D.C. Official Code  1-301.47a).

       Sec. 11. Effective date.

       This act shall take effect following approval by the Mayor (or in the event of veto by the

Mayor, action by the Council to override the veto), a 30-day period of congressional review as

provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December

24, 1973 (87 Stat. 813; D.C. Official Code  1-206.02(c)(1)), and publication in the District of

Columbia Register.

               ______________________________

               Chairman

               Council of the District of Columbia

_________________________________

Mayor

District of Columbia

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