CSAA IG 2023 Impact Report 0424 Rev1 - Flipbook - Page 42
Practice
Our Impact
2023
BACK TO TOP
From Our Interim CEO
Compliance
Our corporate compliance function
tracks ongoing compliance activities
throughout the organization,
evaluating our compliance risk
profile across a variety of categories.
Compliance reports to the chief
legal officer, who also serves as the
chief compliance officer, reporting
to senior management, the audit
committee and board of directors.
Building on the success of last
year’s Compliance Connections
program, CSAA’s cross-functional
compliance committee brought legal,
product and other relevant business
partners together throughout the
year to educate ourselves on how
new trends across CSAA intersect
with compliance. The 2023 program
included a special “Mailbag” episode,
where we invited experts from
across the company to respond to
employee questions on a variety of
compliance topics. We also ran a
session outlining AAA’s corporate
structure (and CSAA’s place within it)
and another providing an overview of
Planet
the commercial lines market. These
connections helped us develop a
more holistic view of compliance
challenges and better understand
the risks in individual areas of our
business. Additionally, they gave
employees in other departments an
opportunity to speak about and raise
visibility for compliance.
Enterprise risk management
Enterprise risk management (ERM)
is ingrained in our culture and
organizational structure from the top
down to ensure explicit risk decisionmaking. We have assigned clear ERM
roles and responsibilities for the
enterprise risk office, led by the chief
risk officer; the risk committee, made
up of C-suite members; the ERM
leadership team; and management.
Additionally, we have established a
robust program to ensure appropriate
oversight of top enterprise risks and
traditional insurance company risks.
To help us better prepare for
climate impacts to our business and
policyholders, in 2022 we added an
People
Practice
entirely new dimension to our risk
management through the adoption
of Task Force on Climate-Related
Financial Disclosures (TCFD)
reporting. The Financial Stability
Board (FSB) created the TCFD to
develop recommendations on the
types of information that companies
should disclose to support investors,
lenders and insurance underwriters
in appropriately assessing and pricing
a specific set of risks—risks related
to climate change. CSAA’s first TCFD
report was issued in November 2022.
Each year AM Best closely evaluates
our balance sheet strength, operating
performance, business profile and
ERM program to rate our ability
to meet our ongoing insurance
obligations. It affirmed our financial
strength rating of A (Excellent)
and outlook of stable, which is
unchanged from its 2022 rating.
AM Best recognized CSAA’s balance
sheet strength, four years of strong
operational performance (sub-100
combined ratios) and its wildfire risk
reduction in California.
Our internal risk models assess our
risk profile and establish economic
capital and solvency requirements,
develop risk tolerance, allocate
capital to individual products and
geographies, establish targeted
rates of return to be used in
ratemaking, and aid in strategic and
operational decision-making. The
audit committee is responsible for
overseeing the risk assessment
and risk management process and
structure, with the full board retaining
visibility and involvement in the process.
CSAA also maintained its “Prominent”
innovation assessment, placing it
ahead of other peer companies in
the innovation space and in the top
10th percentile. The innovation rating
evaluates a company’s innovation
level based on its innovation process
and the impact of its innovation
efforts. AM Best’s innovation scores
are based on the premise that
innovation is fundamental to an
insurer's long-term financial viability.
