New Jersey Banking and Insurance Commissioner Holly C. Bakke announced a new department initiative that focuses on corporate governance and demands more accountability from insurance industry decision-makers.
“Policyholders have a right to financially stable and solvent companies that will be there when they need them,” Bakke said. “They have a right to expect their company to make sound, reasonable decisions that are free from conflicts of interest, and the department has a responsibility to see to it that companies meet those expectations.”
Bakke addressed her comments to a group of insurance industry leaders at a conference co-sponsored by the Department of Banking and Insurance, the New Jersey Bar Association and the Insurance Council of New Jersey. Conference attendees included company directors, corporate counselors and other industry leaders.
A primary focus of the conference was the need to develop independent, responsible boards of directors. “Boards of directors need to be careful stewards of the companies they have been elected to oversee,” Bakke said. “They can not merely rubberstamp the decisions of management. Policyholders deserve better, and the laws of the state of New Jersey demand better.”
As part of her presentation, Bakke outlined the components of the department’s new corporate governance Initiative. The initiative includes a survey of the corporate decision-making structure of all New Jersey domestic insurance companies and HMOs. The survey will gather information on boards of directors, the selection of independent members, accounting review procedures, ethics oversight and executive compensation.
Following the initial survey, the department will be meeting with each board, outlining provisions of current New Jersey law that pertain to corporate governance, presenting a list of “Best Practices” that companies should begin to incorporate into their structure, and critiquing each company’s current structure.
“Responsible corporate governance demands that board of directors become active watchdogs of the companies they control,” Bakke said. “This new department initiative will give these directors the tools and information they need to direct management and become effective financial stewards.”
The new corporate governance Initiative is just one tool in the department’s arsenal to ensure the financial health of companies selling products to New Jersey policyholders. The department also monitors quarterly and annual financial reports. Additionally, the department engages in market conduct examinations to make certain that companies are meeting their obligation to policyholders and are financially stable, Bakke said.
The following industry leaders joined the commissioner in sharing their perspectives on the importance of corporate governance: Magdalena Padilla, Insurance Council of New Jersey; Robert A. Schwartz, of Windels Marx Lane & Mittendorf; Assistant Commissioner Karen Mitchell, Chief Insurance Examiner Ray Conover and Financial Examiner Ray Jones, all of the Department of Banking and Insurance; Michelle L. Sarver, Senior Manager of the Audit Committee Institute of KPMG; Tony Dickson, president of New Jersey Manufacturers Insurance Co.; James Gorman, president of Proformance Co.; Richard Crist, president of Allstate New Jersey, and Kathleen Gibson, vice president and secretary of Prudential Financial.
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