S.D. Admin. R. 20:06:60:06

Current through Register Vol. 50, page 159, June 17, 2024

Section 20:06:60:06 - Description of Senior Management

The insurer or insurance group shall describe the policies and practices for directing Senior Management, including a description of the following factors:

(1) Any processes or practices, including suitability standards, to determine whether officers and key persons in control functions have the appropriate background, experience, and integrity to fulfill their prospective roles, including:

(a) Identification of the specific positions for which suitability standards have been developed and a description of the standards employed; and

(b) Any changes in an officers or key persons suitability as outlined by the insurers or insurance groups standards and procedures to monitor and evaluate such changes;

(2) The insurers or insurance groups code of business conduct and ethics, the discussion of which considers, for example:

(a) Compliance with laws, rules, and regulations; and

(b) Proactive reporting of any illegal or unethical behavior;

(3) The insurers or insurance groups processes for performance evaluation, compensation, and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description shall include sufficient detail to allow the Commissioner to understand how the organization ensures that compensation programs do not either encourage or reward, or both, excessive risk taking. Elements to be discussed may include, for example:

(a) The Boards role in overseeing management compensation programs and practices;

(b) The various elements of compensation awarded in the insurers or insurance groups compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid;

(c) How compensation programs are related to both company and individual performance over time;

(d) Whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels;

(e) Any clawback provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; and

(f) Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees; and

S.D. Admin. R. 20:06:60:06

46 SDR 146, effective 7/2/2020

General Authority: SDCL 58-5-166 Law Implemented: SDCL 58-5-166