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An Update on the Corporate Governance Annual Disclosures

By Kia Bickel, CPA, Senior Manager

By now you’re familiar with the Corporate Governance Annual Disclosure (CGAD), adopted by the NAIC in 2014. If you’re in management or a Board member, you’ve probably begun planning for it, considering the first filing would have been due June 1, 2016 if your state of domicile adopted it. To-date, it only takes one hand to count the number of states that have adopted the CGAD, meaning most companies have at least another year to prepare. How do you most effectively use this relief period?

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  1. Re-acquaint yourself with the CGAD Model Regulation and have the Board meet with management to prepare the required disclosures.
  2. Phone a friend!  Reach out to your peers in Iowa, Louisiana and Vermont and ask them about their experience.
  3. See if your state published a comparison of current practice and statutory authority versus the CGAD
  4. Keep reading

There’s no right answer; employ all of your options to make sure you are comfortable when your filing is due.

What do the Grateful Dead, Loretta Lynn, Gregg Allman, Janet Jackson and the CGAD have in common? They tell us “Don’t mess up a good thing.” For many filers the CGAD should be an exercise of compiling existing documentation to be referenced in this centralized filing. If you’ve already documented corporate governance to your satisfaction elsewhere, don’t mess with it! The CGAD gives you the option to reference existing documents (e.g., ORSA Summary Report, Holding Company Form B or F Filings, Securities and Exchange Commission (SEC) Proxy Statements).

What if it is broken? Your company may have gone through a corporate governance overhaul years ago, but does the existing documentation respond to risks we see today that a governing body can structure itself to mitigate? The CGAD is an opportunity to take inventory of what you’re doing (and documenting) well and fix what you could be doing better. Succession planning, for instance, has been a tough topic for many enterprises. In its simplest form, the CGAD should discuss the following:

Corporate Governancy Framework and Structure
1. Board and committes ultimately responsible for oversight and levels at which that occurs
2. Rationale for Board size and structure
3. Board and Committee governance policies and leadership design

Board Policies and Practices:
1. Member qualifications
2. Member independence
3. Meetings held and who attended
4. Member nominations and elections
5. Board self-evaluation and committee evaluation processes

Policies and Practices for Directing Senior Management:
1. Determining whether officers and key persons in control functions have the appropriate background, experience and integrity to fulfill their roles
2. Code of business conduct and ethics
3. Performance evaluation process
4. Compensation and related incentive programs or performance improvement measures and ensuring the structure does not incentivize excessive risk taking
5. Succession planning

Ensuring an Appropriate Amount of Oversight for Critical Risk Areas:
1. How oversight and management responsibilities are delegated among those charged with governance
2. How the Board stays informed of strategic plans, risks, and risk-mitigating steps
3. How reporting responsibilities for critical risk areas are organized and how frequently the results are communicated to Senior Management and the Board

A year from now, not every state will have adopted the CGAD, but your state of domicile could be next, and you could be the friend to phone.

For more information, contact Kia Bickel, via email at