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|Company Governance Policy|
CORPORATE GOVERNANCE – POLICYHOLDER COMMUNICATION
In this atmosphere of corporate governance interest and scrutiny we are providing the policyholders of Fulmont Mutual Fire Insurance Company with a summary of our Company Governance policy.
CORPORATE GOVERNANCE BACKGROUND:
Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, etc. A governance plan spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance.
Mutual boards owe duties to their company and member policyholders that are the same as the duties owed by directors of stock corporations to their companies and shareholders.
These duties are very important to the exercise of sound governance practice on the part of mutual company board members.
Articles, Bylaws and Charter:
Articles of Incorporation set out the basic framework and structure of the organization, identifying the bodies or entities that will provide governance, the offices that comprise the basic management of the organization, the provisions regarding membership or ownership, the provisions for required meetings, etc.
Bylaws are the “contract” of existence between the business entity and members of the organization. The additional detail in bylaws addresses the following subjects –the rights of members or owners, the basic roles or duties of the board and officer positions, the timing and notice of meetings, the method of board nominations and elections, the removal of directors, and board indemnity provisions.
Our Insurance Charter states what kinds of insurance business under the NYS Insurance Law we are allowed to write as well as our writing territory.
Please be assured that your Board of Directors understand that an important part of a mutual company’s governance practice is to review and maintain an effective set of articles and bylaws.
Board of Directors:
The Board of Directors and/or the Executive Committee have a minimum of four meetings a year – one of which must be a full Board of Directors meeting. The Executive Committee is vested with the powers of the Board of Directors during the intervals when the board is not in session – subject to the limitations as exist by law.
The Board of Directors consists of ten people some of whom have specialized experience in the Insurance Industry, various business background, and the legal profession.
Outside directors are not employed by the company, and usually have no other financial relationship to the company other than, perhaps, as a policyholder.
Our Bylaws state that we will have at least two inside Directors. Currently the inside directors consist of the President, Secretary and the Treasurer.
There are currently 7 outside directors and 3 inside directors.
Qualifications of Directors
Collective Board Competencies
Some of the factors that help to decide whether a board should establish a committee include
The following are the committees that conform to the proper governance of our Insurance Company:
Committees meet once a year or on an as need basis. It should be noted that the entire Board of Directors serve on most of these committees.
Policyholder Status as “Owner”
Even though we commonly state that policyholders own a mutual insurer, the membership interest of a policyholder is not equivalent to ownership. In its most common sense, ownership usually implies a right of dominion and control over property, including the right to dispose of the property. In a mutual insurance company, policyholders, or members, do not have the ability to sell or otherwise transfer individual ownership. The ownership interest arises out of the policy of insurance and does not exist after the termination of the policy of insurance
Please direct any questions you have about our governance policy to: firstname.lastname@example.org
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