{"data":{"id":"us-ok/okla.-stat.-tit.-36-36-6454.1","jurisdiction":"us-ok","citation":"Okla. Stat. tit. 36, § 36-6454.1","heading":"Risk retention groups – Governance standards","body":"A. For the purposes of this section:\n\n1. \"Board of Directors\" or \"Board\" means the governing body of\n\nthe risk retention group elected by the shareholders or members to\n\nestablish policy, elect or appoint officers and committees, and make\n\nother governing decisions;\n\n2. \"Director\" means a natural person designated in the articles\n\nof the risk retention group, or designated, elected or appointed by\n\nany other manner, name or title to act as a director;\n\n3. \"Disclose\" means making information available through\n\nelectronic or any other means the Board determines is necessary; and\n\n4. \"Service Providers\" means captive managers, auditors,\n\naccountants, actuaries, investment advisors, lawyers, managing\n\ngeneral underwriters or other parties responsible for underwriting,\n\ndetermination of rates, collection of premiums, adjusting and\n\nsettling claims and/or the preparation of financial statements.\n\nB. Existing risk retention groups shall comply with the\n\nfollowing governance standards within one year of the effective date\n\nof this act. Risk retention groups licensed on or after the\n\neffective date of this act shall be in compliance with the standards\n\nat the time of licensure.\n\nC. The Board of Directors of the risk retention group shall be\n\ncomposed of a majority of independent directors. No director shall\n\nqualify as independent unless the Board affirmatively determines\n\nthat the director has no material relationship with the risk\n\nretention group. Each risk retention group shall disclose these\n\ndeterminations to its domestic regulator at least annually.\n\nNotwithstanding any other provision of law, a person that is a\n\ndirect or indirect owner of or subscriber in the risk retention\n\ngroup, or is an officer, director or employee of such an owner and\n\ninsured, is considered to be independent unless some other position\n\nof such officer, director or employee constitutes a material\n\nrelationship. Material relationship of a person with the risk\n\nretention group shall include, but is not limited to:\n\n1. The receipt in any one twelve (12) month period of\n\ncompensation or payment of any other item of value by such person, a\n\nmember of such person's immediate family or any business with which\n\nthe person is affiliated from the risk retention group or a\n\nconsultant or service provider to the risk retention group is\n\ngreater than or equal to five percent (5%) of the risk retention\n\ngroup's gross written premium for the twelve (12) month period or\n\ntwo percent (2%) of its surplus, whichever is greater, as measured\n\nat the end of any fiscal quarter falling in the twelve (12) month\n\nperiod. The person or immediate family member of such person is not\n\nindependent until one year after his or her compensation from the\n\nrisk retention group falls below the threshold provided in this\n\nparagraph.\n\n2. A relationship with a director or an immediate family member\n\nof a director who is affiliated with or employed in a professional\n\ncapacity by a present or former internal or external auditor of the\n\nrisk retention group is not independent until one year after the end\n\nof the affiliation, employment or auditing relationship.\n\n3. A relationship with a director or immediate family member of\n\na director who is employed as an executive officer of another\n\ncompany where any of the risk retention group's present executives\n\nserve on the other company's Board of Directors is not independent\n\nuntil one year after the end of such service or the employment\n\nrelationship.\n\nD. The term of any material service provider contract with the\n\nrisk retention group shall not exceed five (5) years. Any such\n\ncontract, or its renewal, shall require the approval of the majority\n\nof the risk retention group's independent directors. The risk\n\nretention group's Board shall have the right to terminate any\n\nservice provider, audit or actuarial contract at any time for cause\nonship.\n\nD. The term of any material service provider contract with the\n\nrisk retention group shall not exceed five (5) years. Any such\n\ncontract, or its renewal, shall require the approval of the majority\n\nof the risk retention group's independent directors. The risk\n\nretention group's Board shall have the right to terminate any\n\nservice provider, audit or actuarial contract at any time for cause\n\nafter providing adequate notice as defined in the contract. The\n\nservice provider contract is deemed material if the amount to be\n\npaid for the contract is greater than or equal to five percent (5%)\n\nof the risk retention group's annual gross written premium or two\n\npercent (2%) of its surplus, whichever is greater. For the purpose\n\nof this section, lawyer shall not include defense counsel retained\n\nby the risk retention group to defend claims, unless the amount of\n\nfees paid to such lawyers are material. No service provider\n\ncontract violating the provisions prohibiting material\n\nrelationships, as specified in subsection B of this section, shall\n\nbe entered into unless the risk retention group has notified the\n\nCommissioner in writing of its intention to enter into such contract\n\nat least thirty (30) days prior and the Commissioner has not\n\ndisapproved it within such period. To the extent permissible under\n\nstate law, service providers of a reciprocal risk retention group\n\nshall contract with the risk retention group.\n\nIf the risk retention group is a reciprocal risk retention\n\ngroup, then the attorney-in-fact would be required to adhere to the\n\nsame standards regarding independence of operation and governance as\n\nimposed on the Board's advisory committee created pursuant to this\n\nsection.\n\nE. The risk retention group's Board shall adopt a written\n\npolicy in the plan of operation, as approved by the Board, that\n\nrequires the Board to:\n\n1. Assure that all owners and insureds of the risk retention\n\ngroup receive evidence of ownership interest;\n\n2. Develop a set of governance standards applicable to the risk\n\nretention group;\n\n3. Oversee the evaluation of the risk retention group's\n\nmanagement including but not limited to the performance of the\n\ncaptive manager, managing general underwriter or other party or\n\nparties responsible for underwriting, determination of rates,\n\ncollection of premium, adjusting or settling claims or the\n\npreparation of financial statements;\n\n4. Review and approve the amount to be paid for all material\n\nservice providers; and\n\n5. Review and approve, at least annually:\n\na. the risk retention group's goals and objectives\n\nrelevant to the compensation of officers and service\n\nproviders,\n\nb. the officers' and service providers' performance\n\nconsidering those goals and objectives, and\n\nc. the continued engagement of the officers and material\n\nservice providers.\n\nF. 1. The risk retention group shall have an audit committee\n\ncomposed of at least three independent Board members, as specified\n\nin subsection C of this section. A nonindependent Board member may\n\nparticipate in the activities of the audit committee, if invited by\n\nthe members, but shall not be a member of the committee.\n\n2. The audit committee shall have a written charter that\n\ndefines the purpose of the committee that includes but is not\n\nlimited to:\n\na. assisting Board oversight of:\n\ni. the integrity of the financial statements,\n\nii. the compliance with legal and regulatory\n\nrequirements, and\n\niii. the qualifications, independence and performance\n\nof the independent auditor and actuary,\n\nb. discussing the annual audited financial statements and\n\nquarterly financial statements with management,\n\nc. discussing the annual audited financial statements\n\nwith its independent auditor and, if advisable,\n\ndiscuss its quarterly financial statements with its\n\nindependent auditor,\n\nd. discussing policies with respect to risk assessment\n\nand risk management,\nthe annual audited financial statements and\n\nquarterly financial statements with management,\n\nc. discussing the annual audited financial statements\n\nwith its independent auditor and, if advisable,\n\ndiscuss its quarterly financial statements with its\n\nindependent auditor,\n\nd. discussing policies with respect to risk assessment\n\nand risk management,\n\ne. meeting separately and periodically, either directly\n\nor through a designated representative of the\n\ncommittee, with management and independent auditors,\n\nf. reviewing with the independent auditor any audit\n\nproblems or difficulties and management's response,\n\ng. setting clear hiring policies of the risk retention\n\ngroup as to the hiring of employees or former\n\nemployees of the independent auditor,\n\nh. requiring the external auditor to rotate the head\n\naudit partner having primary responsibility for the\n\nrisk retention group's audit, as well as the audit\n\npartner responsible for reviewing that audit so that\n\nneither individual performs audit services for more\n\nthan five (5) consecutive fiscal years, and\n\ni. reporting regularly to the Board.\n\n3. The domestic regulator may waive the requirement to\n\nestablish an audit committee if the risk retention group is able to\n\ndemonstrate to the domestic regulator that it is impracticable to do\n\nso and the risk retention group's Board is able to accomplish the\n\npurposes of an audit committee described in this subsection.\n\nG. The Board shall adopt and disclose governance standards and\n\nprovide the information to members and insureds upon request, which\n\nshall include but not be limited to:\n\n1. A process by which the directors are elected by the owner\n\nand insureds;\n\n2. Director qualification standards;\n\n3. Director responsibilities;\n\n4. Director access to management and, as necessary and\n\nappropriate, independent advisors;\n\n5. Director compensation;\n\n6. Director orientation and continuing education;\n\n7. The policies and procedures that are followed for management\n\nsuccession; and\n\n8. The policies and procedures that are followed for annual\n\nperformance evaluation of the Board.\n\nH. The Board shall adopt and disclose a code of business\n\nconduct and ethics for directors, officers and employees of the risk\n\nretention group and shall promptly disclose to the Board any waivers\n\nof the code for directors or executive officers, which shall include\n\nthe following topics:\n\n1. Conflicts of interest;\n\n2. Matters covered under the corporate opportunities doctrine\n\nunder the state of domicile;\n\n3. Confidentiality;\n\n4. Fair dealing;\n\n5. Protection and proper use of risk retention group assets;\n\n6. Compliance with all applicable laws, rules and regulations;\n\nand\n\n7. Requiring the reporting of any illegal or unethical behavior\n\nwhich affects the operation of the risk retention group.\n\nI. The captive manager, president or chief executive officer of\n\nthe risk retention group shall promptly notify the domestic\n\nregulator in writing if either becomes aware of any material\n\nnoncompliance with the governance standards specified in subsections\n\nG and H of this section.","path":["OK Code","Title 36"],"source_url":"https://www.oklegislature.gov/OK_Statutes/CompleteTitles/os36.pdf","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:36Z","sha256":"a5d0c5d648fbabcddfc59b7465a757342822cfc61bb4bf5db59d85f81a903558","source_id":"us-ok","stale":false,"prev":"us-ok/okla.-stat.-tit.-36-36-6454","next":"us-ok/okla.-stat.-tit.-36-36-6455"},"notice":"GroundRules: Original legal text. Not legal advice."}