Corporate Governance Annual Disclosure Law

  1. Law
  2. Illinois Compiled Statutes
  3. INSURANCE
  4. Illinois Insurance Code.
  5. Corporate Governance Annual Disclosure Law

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(215 ILCS 5/Art. VIII.33 heading)

ARTICLE VIII 1/3. CORPORATE GOVERNANCE ANNUAL DISCLOSURE LAW

 

(215 ILCS 5/130.1)

Sec. 130.1. Short title. This Article may be cited as the Corporate Governance Annual Disclosure Law.

(Source: P.A. 101-600, eff. 12-6-19.)

 

(215 ILCS 5/130.2)

Sec. 130.2. Purpose and scope. The purpose of this Article is to:

  • (1) provide the Director a summary of an insurer's or insurance group's corporate governance structure, policies, and practices to permit the Director to gain and maintain an understanding of the insurer's corporate governance framework;
  • (2) outline the requirements for completing a corporate governance annual disclosure with the Director;
  • (3) provide for the confidential treatment of the corporate governance annual disclosure and related information that will contain confidential and sensitive information related to an insurer's or insurance group's internal operations and proprietary and trade-secret information that, if made public, could potentially cause the insurer or insurance group competitive harm or disadvantage.

Nothing in this Article shall be construed to prescribe or impose corporate governance standards and internal procedures beyond that which is required under applicable State corporate law. Notwithstanding the foregoing, nothing in this Article shall be construed to limit the Director's authority or the rights or obligations of third parties under Sections 131.21, 132 through 132.7, and 401 through 403. The requirements of this Article apply to all insurers domiciled in this State.

(Source: P.A. 101-600, eff. 12-6-19.)

 

(215 ILCS 5/130.3)

Sec. 130.3. Definitions. As used in this Article:

"Director" means the Director of Insurance.

"Corporate governance annual disclosure" means a confidential report filed by the insurer or insurance group made in accordance with the requirements of this Article.

"Insurance group" means those insurers and affiliates included within an insurance holding company system as defined in Section 131.1.

"Insurer" has the same meaning given to "company" in Section 2, except that it does 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 political subdivision of a state.

"ORSA summary report" means the own risk and solvency assessment report filed in accordance with Article VIII 1/4.

(Source: P.A. 101-600, eff. 12-6-19.)

 

(215 ILCS 5/130.4)

Sec. 130.4. Disclosure requirement.

(a) An insurer, or the insurance group of which the insurer is a member, shall, no later than June 1 of each calendar year, submit to the Director a corporate governance annual disclosure that contains the information described in subsection (b) of Section 130.5. Notwithstanding any request from the Director made pursuant to subsection (c), if the insurer is a member of an insurance group, the insurer shall submit the report required by this Section to the Director of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.

(b) The corporate governance annual disclosure must 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 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 corporate governance annual disclosure under this Section shall do so upon the Director's request.

(d) 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. The insurer or insurance group is encouraged to make the corporate governance annual disclosure at the level at which the insurer's or insurance group's risk appetite is determined, the level at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors is 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 3 criteria was used to determine the level of reporting and explain any subsequent changes in the level of reporting.

(e) The review of the corporate governance annual disclosure and any additional requests for information shall be made through the lead state as determined by the procedures within the most recent Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.

(f) Insurers providing information substantially similar to the information required by this Article in other documents provided to the Director, including proxy statements filed in conjunction with the requirements of Section 131.13 or other State or federal filings provided to the Department, are not required to duplicate that information in the corporate governance annual disclosure but are only required to cross-reference the document in which the information is included.

(Source: P.A. 101-600, eff. 12-6-19; 102-135, eff. 7-23-21.)

 

(215 ILCS 5/130.5)

Sec. 130.5. Contents of corporate governance annual disclosure.

(a) The insurer or insurance group has discretion over the responses to the corporate governance annual disclosure inquiries if the corporate governance annual disclosure contains the material information necessary to permit the Director to gain an understanding of the insurer's or insurance group's corporate governance structure, policies, and practices. The Director may request additional information that he or she deems material and necessary to provide the Director with a clear understanding of the corporate governance policies, the reporting or information system, or controls implementing those policies.

(b) Notwithstanding subsection (a), the corporate governance annual disclosure shall be prepared in a manner consistent with rules adopted by the Director. Documentation and supporting information shall be maintained and made available upon examination or upon the request of the Director.

(c) The Director may retain, at the insurer's expense, third-party consultants, including attorneys, actuaries, accountants, and other experts not otherwise a part of the Director's staff, as may be reasonably necessary to assist the Director in reviewing the corporate governance annual disclosure and related information or the insurer's compliance with this Article. Any persons retained shall be under the direction and control of the Director and shall act only in an advisory capacity.

(Source: P.A. 101-600, eff. 12-6-19.)

 

(215 ILCS 5/130.6)

Sec. 130.6. Confidentiality.

(a) Documents, materials, or other information, including the corporate governance annual disclosure, in the possession or control of the Department that are obtained by, created by, or disclosed to the Director or any other person under this Article 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 subject to the Freedom of Information Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the Director is authorized to use the documents, materials, or other information in furtherance of any regulatory or legal action brought as a part of the Director's official duties. The Director shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer.

(b) Neither the Director nor any person who received documents, materials, or other corporate governance annual disclosure-related information through examination or otherwise, while acting under the authority of the Director or with whom such documents, materials, or other information are shared pursuant to this Article, shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (a).

(c) In order to assist in the performance of the Director's regulatory duties, the Director may:

  • (1) upon request, share documents, materials, or other corporate governance annual disclosure-related information, including the confidential and privileged documents, materials, and information subject to subsection (a), including proprietary and trade-secret documents and materials with other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in subsection (c) of Section 131.20, with the National Association of Insurance Commissioners, and with third-party consultants, if the recipient agrees in writing to maintain the confidentiality and privileged status of the corporate governance annual disclosure-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; and
  • (2) receive documents, materials, or other corporate governance annual disclosure-related information, including otherwise confidential and privileged documents, materials, and information, including proprietary and trade-secret information and documents from regulatory officials of other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in subsection (c) of Section 131.20, 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) A written agreement with the National Association of Insurance Commissioners or a third-party consultant governing sharing and use of information provided pursuant to this Article shall:

  • (1) include specific procedures and protocols for maintaining the confidentiality and security of corporate governance annual disclosure-related information shared with the National Association of Insurance Commissioners or a third-party consultant pursuant to this Article, including procedures and protocols for sharing by the National Association of Insurance Commissioners only with other state regulators from states in which the insurance group has domiciled insurers; the agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the corporate governance annual disclosure-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality;
  • (2) specify that ownership of the corporate governance annual disclosure-related information shared with the National Association of Insurance Commissioners or a third-party consultant remains with the Director and that the National Association of Insurance Commissioners' or third-party consultant's use of the information is subject to the direction of the Director;
  • (3) prohibit the National Association of Insurance Commissioners or a third-party consultant from storing the information shared pursuant to this Article in a permanent database after the underlying analysis is completed;
  • (4) require the National Association of Insurance Commissioners or a third-party consultant to provide prompt notice to the Director and to the insurer or insurance group regarding any subpoena, request for disclosure, or request for production of the insurer's or insurance group's corporate governance annual disclosure-related information;
  • (5) require the National Association of Insurance Commissioners or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the National Association of Insurance Commissioners or a third-party consultant may be required to disclose confidential information about the insurer shared with the National Association of Insurance Commissioners or a third-party consultant pursuant to this Article; and
  • (6) require the National Association of Insurance Commissioners or a third-party consultant to obtain written consent of the insurer before making any of the insurer's corporate governance annual disclosure-related information public.

(e) The sharing of information and documents by the Director pursuant to this Article shall not constitute a delegation of regulatory authority or rulemaking, and the Director is solely responsible for the administration, execution, and enforcement of this Article.

(f) No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade-secret materials, or other corporate governance annual disclosure-related information shall occur as a result of disclosure of such information or documents to the Director under this Section or as a result of sharing as authorized in this Article.

(g) Documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners or any third-party consultants pursuant to this Article shall be confidential by law and privileged, shall not be subject to the Freedom of Information Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.

(Source: P.A. 101-600, eff. 12-6-19.)

 

(215 ILCS 5/130.7)

Sec. 130.7. Sanctions. Any insurer failing, without just cause, to timely file the corporate governance annual disclosure as required in this Article shall be required, after notice and a hearing, to pay a penalty of $200 for each day's delay, to be recovered by the Director. Any penalty recovered shall be paid into the General Revenue Fund. The Director may reduce the penalty if the insurer demonstrates to the Director that the imposition of the penalty would constitute a financial hardship to the insurer.

(Source: P.A. 101-600, eff. 12-6-19.)


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