SB 1026 Summary

• Establishes governance standards for risk retention groups effective October 1, 2015, requiring a majority-independent board of directors elected by owners or members, with specific independence criteria and material relationship disclosures

• Limits material service provider contracts to five-year terms with board approval and requires 30-day advance notice to the Insurance Commissioner before entering contracts with service providers involving material relationships

• Requires risk retention groups to establish audit committees composed of at least three independent directors to oversee financial statement integrity, regulatory compliance, and auditor qualifications and independence

• Mandates boards adopt written governance standards and codes of business conduct addressing conflicts of interest, confidentiality, fair dealing, asset protection, and legal compliance

• Updates plan of operation and feasibility study requirements to include coverage details for each state where the group intends to operate and requires notification of material revisions to the Insurance Commissioner