PA Legislature Introduces Revised Version of Corporate Governance Annual Disclosure Statute Now to be Effective in 2020 – What Has Changed From the Initial Version Introduced in 2017 and How it Impacts You
As reported in our October 2017 Alert, on October 3, 2017, the Pennsylvania legislature introduced legislation (HB 1848) to adopt a Pennsylvania-specific version of the NAIC Corporate Governance Annual Disclosure Model Act (“CGAD”) that would require insurers to make an annual filing beginning in 2018 on their corporate governance framework, policies and practices. After discussion with industry organizations, on June 11, 2018, the Pennsylvania legislature introduced revised CGAD legislation (SB 1205) that addresses many of the questions and concerns raised by the industry. While the October 2017 Alert advised on what you should know and be preparing now to comply with this significant new annual filing requirement, below is a list of some of the most significant revisions in SB 1205 that may impact your CGAD filing.
- First CGAD Filing Date: While HB 1848 would have had a first CGAD filing date of June 1, 2018, SB 1205 has a first filing date of June 1, 2020 -- thus comporting with the NAIC’s adoption of CGAD as a state accreditation standard effective in 2020.
- Provision of a CGAD Template: While there continues to be no specific form/format for providing the required CGAD filing information and insurers/insurance groups have discretion in how they provide the required information, SB 1205 indicates that the PA Insurance Department will include a sample template for a CGAD on its internet website.
- Department Consideration of Premium Volume, Licensing Status in Other States and Corporate Complexity and Scale: SB 1205 advises that the Department will consider each of these factors when evaluating the comprehensiveness of the CGAD of an insurer/insurance group.
- Department Consideration of Complexity of Governance Structure and Department Expertise: SB 1205 indicates that the Department will consider each of these factors before retaining a third-party consultant (at the expense of the insurer/insurance group).
- Clarification on Subsequent CGAD Filings: SB 1205 clarifies that, after the first CGAD filing, subsequent annual filings need only be an amended version of the first filing – indicating either where changes have been made or that no changes were made.
Each of these revisions – and others in SB 1205 – should assist insurers and insurer groups in understanding the expectations of the PA Insurance Department with the required CGAD filings and ease some of the anxiety that the industry has expressed over the CGAD requirement.
For questions on the proposed PA CGAD requirement or assistance in analyzing your governance structure and practices, please feel free to contact Fran Roggenbaum at 717.257.7526 / Fran.Roggenbaum@saul.com or Jeremy Heinnickel at 717.257.7575 / Jeremy.Heinnickel@saul.com