Corporate governance

MDDUS is a mutual defence organisation offering expert advice, assistance and indemnity cover to doctors, dentists and other healthcare professionals across the UK

Founded in 1902, MDDUS is a mutual defence organisation offering expert advice, assistance and indemnity cover to doctors, dentists and other healthcare professionals across the UK.

We are wholly owned by our membership – we have no shareholders and pay no dividends. A priority of the Board is protecting the mutual fund of subscriptions and other income to deliver our principal activity. This means the benefits of membership are discretionary as set out in our Articles of Association.

A private company limited by guarantee, MDDUS is the trading name of the holding company of the Group. There are four wholly owned subsidiaries: MDDUS Insurance Limited, an insurance company; MDDUS Services Limited, an insurance intermediary authorised by the Financial Conduct Authority; MDDUS Education Limited, a risk and training company; and MDDUS Property Limited, which oversees the management and performance of our investment property portfolio.

Although MDDUS is not listed on the London Stock Exchange, the Board is committed to a high standard of corporate governance. As a member of the Association of Financial Mutuals (AFM), we must apply and report against the principles of the new AFM Corporate Governance Code (January 2019) (‘the Code’) – namely, purpose and leadership, Board composition, director responsibilities, opportunity and risk, remuneration, and stakeholder relationships and engagements. In doing so, the Board has regard to: the guidance provided in the Code; our business model, management and mutual ownership status; and the overriding statutory and fiduciary duties of a director. These principles are considered in turn in our most recent Annual Report and Accounts.

Our corporate governance arrangements were most recently reviewed and updated during 2020. A narrative report about our application of the Code is provided in our most recent Annual Report and Accounts.

MDDUS Board

The governing document of MDDUS is our Articles of Association. It provides that the business of MDDUS shall be managed by the Board, which has terms of reference and a schedule of matters reserved for its consideration / decision, e.g. the approval of strategy, substantive changes to the services provided to members and the Annual Report and Accounts.

Since the Annual General Meeting (AGM) in 2019, the Articles have contained no limit on the size of the Board. As at the end of that year, there were 16 directors, consisting of 12 Non-Executive Directors (NEDs) and four Executive Directors: the Chief Executive, the Finance Director, the Director of Advisory and Legal Services and the Special Executive Director (AGM 2020: 11 and three directors). Any voting member of MDDUS can stand for appointment to the Board at an AGM. The Articles now contain no limit on the number of ‘external’ non-clinical appointments to the Board. NEDs generally serve not more than three terms each of up to three years in office, subject to the succession planning needs of the
Board. There is an agreement to reduce the size of the Board.

Biographies for our Directors are available on our website.

In addition to agreeing short-term appointments of NEDs between AGMs, the Board also appoints Directors to the positions of Chair, Vice-Chair and Senior Independent Director. The role of Chair is separate to that of Chief Executive and the profile for the former distinguishes clearly between leading the Board and executive responsibility for the running of the business.

The Board has agreed a process for evaluating, in consecutive years, its performance and that of individual NEDs.

The Board usually meets six times a year and has a forward business programme, which helps to shape the agenda for each meeting, in consultation with the Chair, the Chief Executive / Secretary and the Deputy Company Secretary. A typical meeting will consider emerging strategic and policy matters, management information (including about progress against the business plan and the management accounts) and minutes of meetings of its committees and subsidiary boards.

MDDUS Board committees and groups

The Board is supported in its work by committees and executive groups. The membership of these bodies, and the Group’s subsidiaries, is reviewed annually. All NEDs serve on at least one committee or group, but members of the Investment Committee cannot serve on the
Audit and Risk Committee. The Executive Directors attend or are members of each committee or group.

The Audit and Risk Committee is charged with, amongst other things, reviewing the governance framework of the Group and any developments in governance ‘good practice’, considering the reports of the external and internal auditors and the executive’s responses, endorsing the Annual Report and Accounts to the Board, endorsing the (re-)appointment of the External Auditor to the Board, and oversight of risk management and financial and other internal controls.

The Investment Committee is charged with, amongst other things, recommending to the Board the MDDUS Investment Strategy and the Investment Policy Statement and overseeing the performance of the Investment Advisers and Managers.

The Remuneration and Nominations Committee is charged with, amongst other things, determining and keeping under review the remuneration and terms and conditions of service of the senior Executive and NEDs, being consulted about our pay and reward practices and leading an open and transparent process to identify and nominate candidates to fill vacancies on the Board, its committees and subsidiaries. When nominating suitable candidates, the Committee takes into account the structure, size and diversity of the Group’s governance framework and the current and potential needs of MDDUS. Diversity enables more effective discussions and better decision-making, so it is defined by the Committee in its widest sense, to include gender, social and ethnic background, and cognitive and personal strengths. Although all nominations are based on merit, the Committee aims to long-list candidates to maintain a Board membership of at least 50 per cent female NEDs, subject to the succession planning needs of the Board. There is a role profile for NEDs (and each of the Board’s office holders) and an induction programme for new directors. The Committee is also responsible for determining, and reviewing the outcomes of, the processes to evaluate the performance of the NEDs.

The Actuarial Reserving and Pricing Group (ARPG) is charged with, amongst other things, reviewing and challenging the actuarial reserving and pricing processes, methodologies and assumptions used in setting the year-end actuarial reserves and pricing, and providing assurance that these have been properly reviewed internally and by external peer-reviewers. The Chief Executive is the Chair of the Group, which currently comprises the Chairs and Vice-Chairs of the Board, the Audit and Risk Committee and the Investment Committee.

The Executive

The Chief Executive leads our executive and is the Chair of the Executive Committee, which considers commercial, member-facing, operational and planning issues, the PreBoard Group, which considers draft papers and other advice to the Board, and the Executive Pricing Group, which considers actuarial and pricing matters referred to it, for example, by the Board or the Executive Committee.

The Membership

MDDUS is wholly owned by the membership. Accordingly, the members are encouraged to support our ‘good governance’, for example, by standing for appointment to the Board and / or attending the AGM to receive the Annual Report and Accounts, to appoint NEDs and the
External Auditor and to consider other resolutions. The Notice of the AGM and related papers are published at the earliest opportunity, whilst ensuring compliance with the NED appointment process.

For more information about our governance arrangements, please contact:

Bryan Hislop
Deputy Company Secretary / Head of Governance
secretary@mddus.com

Meet the MDDUS Board

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