The Massachusetts Division of Insurance is undertaking a detailed examination of executive compensation at insurance carriers domiciled in the state.The regulators said last week they have sent letters to some 88 insurers, requesting information on how the companies determine compensations. Insurers are also asked to report the pay for board directors, trustees and officers, and any employee who made over $100,000 per year in 2010 and 2011.
The agency is also requesting from insurers all minutes and supplemental materials from board and compensation committee meetings where pay issues were discussed and reviewed. Insurers have about 30 days to respond.
The agency spokesman Dan Rosenfeld told Insurance Journal that the review is informational and that a report will be released at the end of the process.
“The Division of Insurance initiated this review to gather more detailed information as the state legislature contemplates additional corporate governance and reporting requirements for mutual companies. At the conclusion of the review, the Division of Insurance will issue a report.” Massachusetts Insurance Commissioner Joseph Murphy also told Insurance Journal.
The letters sent to carriers note that “the scope of the examination shall include all matters associated with the processes utilized by the company for determining and reporting employee, officer, director, and trustee compensation, as well as any other materials and information the Commissioner of Insurance deems prudent and in the interests of policyholder and the public.”
Specifically, the letter states that carriers should provide copies of company documents for the years 2010 and 2011:
• Any and all minutes, supplemental materials, reports or similar documents from any meeting of the company’s compensation committee or similar company committee that reviews, examines or comments upon, in any way, compensation issues.
• Any and all minutes, supplemental materials, reports or similar documents from any meeting of the company’s board of directors, board of trustees or similar body where a review, examination or comments were made with respect to compensation issues, including but not limited to, any meeting where a vote was held to specifically authorize any compensation amount for any person.
• Any and all company by-laws, including any comments charter or by-laws, specific to compensation as of the current examination date, noting any changes since the prior examination date.
• List of each and every member of the company’s board of directors, board of trustees, or any similar body, including the titles, business affiliations, and total compensation amount received by each person from the company.
• List of each and every officer of the company, with their respective titles and total compensation.
• List of all managerial and non-managerial employees of the company whose individual total compensation is greater than $100,000.
• Copies of the NAIC “Supplemental Compensation Exhibit” and internal company documentation that describes the process used to complete this exhibit. If applicable, descriptions of whether employees who left the company prior to the end of the calendar year were included in the exhibit.