The Banking, Commerce and Insurance Committee heard testimony Jan. 26 on a bill that would provide new corporate governance reporting standard for insurers and risk retention groups (RRGs).
LB819, introduced by Omaha Sen. Brett Lindstrom on behalf of the Nebraska Department of Insurance, would adopt the Corporate Governance Annual Disclosure Act and make changes to the Risk Retention Act, which governs RRGs.
Lindstrom said the bill is model legislation from the National Association of Insurance Commissioners (NAIC) and would incorporate changes necessary for Nebraska to retain its accreditation with the NAIC.
“The act would require all insurers based in Nebraska to annually file a confidential disclosure regarding its corporate governance practices with the Nebraska Department of Insurance,” he said.
Under the bill insurers and insurance groups domiciled in Nebraska would provide a confidential disclosure regarding their corporate governance practices by June 1 annually. The bill also would enact governance standards for RRGs licensed and chartered in the state. All RRGs would be required to be in compliance with the new standards by Jan. 1, 2018.
Bruce Ramge, director of the Nebraska Department of Insurance, testified in support of the bill.
Ramge explained that RRGs are companies owned by members with similar insurance needs that pool their risks and are creatures of both state and federal law. While there currently are no RRGs in Nebraska, he said, the bill provides needed updates to the law should an RRG decide to be chartered here.
“Accreditation is very important for the department and for the state because it allows for our financial regulation to be accepted by all other states,” Ramge said.
Thomas Mays of Pacific Life Insurance also testified in support of the bill, saying NAIC standards allow insurers domiciled in Nebraska to do business across the country.
“Uniformity among all 50 states is important to us to make sure that all states are adopting the same language,” he said.
No one testified in opposition to LB819 and the committee voted 7-0 to advance the bill to general file.