Title 58 — INSURANCE

Source: SL 1992, ch 357 , § 16; SL 2009, ch 271 , § 15.

Terms used in this chapter mean: (1) "Accountant," an independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants and in all states in which the accountant or firm is licensed to practice. For Canadian an…

The lead or coordinating audit partner, having primary responsibility for the audit pursuant to this chapter, may not act in that capacity for more than five consecutive years. The person shall be disqualified from acting in that or a similar capacity for the same company or its …

The director may not recognize as an accountant, nor accept any annual audited financial report, prepared in whole or in part by, any natural person who: (1) Has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ …

An accountant which has been disqualified or any firm which has had an accountant disqualified by the director may request a hearing on the disqualification. The director may, as a result of the hearing, require the insurer to replace the accountant with another qualified account…

An insurer may make written application to the director for approval to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements if the insurer is part of a group of insurance companies which utilizes a pooling or one hund…

An insurer shall require the accountant to report, in writing, within five business days to the board of directors or its audit committee any determination by the accountant that the insurer has materially misstated its financial condition as reported to the director as of the ba…

If the accountant, subsequent to the date of the audited financial report filed pursuant to this chapter becomes aware of facts which might affect his report, the accountant shall take the action prescribed in volume 1, section AU 561 of the professional standards of the American…

In addition to the annual audited financial report, each insurer shall furnish the director with a written communication as to any unremediated material weaknesses in the insurer's internal controls over financial reporting noted during the audit. The communication shall be prepa…

Applicability of §§ 58-43-16.2 to

58-43-16.25 Internal audit function requirements. 58-43-16.26 Internal audit function to be organizationally independent. 58-43-16.27 Report of head of internal audit function to audit committee. 58-43-16.28 Member of insurance holding company system or group of insurers. 58-43-1…

No director or officer of an insurer shall, directly or indirectly: (1) Make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review, or communication required under this chapter; or (2) Omit to state, or cause another …

No officer or director of an insurer, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence any accountant engaged in the performance of an audit pursuant to this chapter if t…

Each insurer required to file an audited financial report pursuant to this chapter that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of five hundred million dollars or more shal…

An insurer or a group of insurers that is: (1) Directly subject to Section 404; (2) Part of a holding company system whose parent is directly subject to Section 404; (3) Not directly subject to Section 404 but is a SOX compliant entity; or (4) A member of a holding company system…

A Management's Report of Internal Control over Financial Reporting shall include: (1) A statement that management is responsible for establishing and maintaining adequate internal control over financial reporting; (2) A statement that management has established internal control o…

Management shall document and make available at the time of a financial condition examination the basis upon which its assertions, required in § 58-43-16.16 , are made. Management may base its assertions, in part, upon its review, monitoring, and testing of internal controls unde…

Management has discretion as to the nature of the internal control framework used, and the nature and extent of documentation, in order to make its assertion in a cost effective manner and, as such, may include assembly of or reference to existing documentation. Source: SL 2009, …

An insurer or group of insurers that is not required to file a report because the total written premium is below the threshold and subsequently becomes subject to the reporting requirements shall have two years following the year the threshold is exceeded (but not earlier than De…

The audit committee shall be directly responsible for the appointment, compensation, and oversight of the work of any accountant, including resolution of disagreements between management and the accountant regarding financial reporting, for the purpose of preparing or issuing the…

Any domestic insurer retaining a certified public accountant on July 1, 2009 who qualifies as independent shall comply with this chapter for the year ending December 31, 2010, and each year thereafter unless the director permits otherwise. Source: SL 2009, ch 271 , § 35.

Any domestic insurer not retaining a certified public accountant on July 1, 2009, who qualifies as independent shall meet the following schedule for compliance unless the director permits otherwise: (1) As of December 31, 2010, file with the director an audited financial report; …

Each foreign insurer shall comply with this chapter for the year ending December 31, 2010, and each year thereafter, unless the director permits otherwise. Source: SL 2009, ch 271 , § 37.

Applicability of §§ 58-43-10 and 58-43-16.2 to

Applicability of §§ 58-43-16.13 to

The insurer or group of insurers shall establish an internal audit function providing independent, objective, and reasonable assurance to the audit committee and insurer management regarding the insurer's governance, risk management, and internal controls. This assurance shall be…

In order to ensure that an internal auditor remains objective, the internal audit function shall be organizationally independent. The internal audit function may not defer ultimate judgment on audit matters to others and shall appoint an individual to head the internal audit func…

The head of the internal audit function shall report to the audit committee regularly, but no less than annually, on the periodic audit plan, factors that may adversely impact the internal audit function's independence or effectiveness, material findings from completed audits, an…

If an insurer is a member of an insurance holding company system or included in a group of insurers, the insurer may satisfy the internal audit function requirements provided in §§ 58-43-16.25 to 58-43-16.27 , inclusive, at the ultimate controlling parent level, an intermediate h…

An insurer is exempt from the requirements of §§ 58-43-16.25 to 58-43-16.28 , inclusive, if the insurer: (1) Has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding any premium that is reinsured with the Federal…

Each member of the audit committee shall be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to §

A member of the audit committee may not be considered independent, other than in the member's capacity as a member of the audit committee, the board of directors, or any other board committee, if the member accepts any consulting, advisory, or other compensatory fee from the enti…

If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, that person, with notice by the responsible entity to the director, may remain an audit committee member of the responsible entity until the earlier of the next annual…

To exercise the election of the controlling person to designate the audit committee for purposes of this chapter, the ultimate controlling person shall provide written notice to the directors of the affected insurer. Notification shall be made timely prior to the issuance of the …

The audit committee shall require the accountant that performs for an insurer any audit required by this chapter to report in a timely manner to the audit committee in accordance with the requirements of AU-C 260, The Auditor's Communication with Those Charged with Governance, as…

If an insurer is a member of an insurance holding company system, any report required by § 58-43-16.7 may be provided to the audit committee on an aggregate basis for insurers in the holding company system only if any substantial differences among insurers in the system are ident…

The proportion of independent audit committee members shall meet or exceed the following criteria: Prior Calendar Year Direct Written and Assumed Premiums $0--$300,000,000 Over $300,000,000-- Over $500,000,000 $500,000,000 No minimum requirements. See also Note A and B. Majority …

The accountant shall furnish the insurer for inclusion in the filing of the annual audited financial report a letter stating: (1) That the accountant is independent with respect to the insurer and conforms to the standards of his profession as contained in the Code of Professiona…

Workpapers are the records kept by the accountant of the procedures followed, the tests performed, the information obtained and the conclusions reached pertinent to his examination of the financial statements of an insurer. Workpapers, accordingly, may include audit planning docu…

The insurer and the accountant shall make available for review by the division or its examiners, all workpapers prepared in the conduct of his audit and any communications related to the audit between the accountant and the insurer, at the offices of the insurer, at the division …

Each insurer having direct premiums written in this state of more than one million dollars in any calendar year and more than one thousand policyholders or certificate holders of directly written policies nationwide at the end of a calendar year is required to have an annual audi…

Upon written application of an insurer, the director may grant an exemption from compliance with this chapter if the director finds, upon review of the application, that compliance with this chapter would constitute a financial or organizational hardship upon the insurer. An exem…

Domestic insurers shall comply with this chapter for the year ending December 31, 1993, and each year thereafter unless the director permits otherwise. Foreign insurers shall comply with this chapter for the year ending December 31, 1994, and each year thereafter unless the direc…

In the case of Canadian and British insurers, the annual audited financial report shall be defined as the annual statement of total business on the form filed by the companies with their supervision authority duly audited by an independent chartered accountant. For these insurers…

Failure of an insurer subject to this chapter to comply with this chapter may result in a fine of not more than twenty - five thousand dollars for each violation or suspension of not more than one year or revocation of the certificate of authority. Source: SL 1992, ch 357 , § 23.

The director may promulgate rules, pursuant to chapter 1-26 , regarding the filing and form of the audited annual financial report, qualifications and waiver of any requirements of the accountant, good cause, consolidated and combined audits, internal control reports, workpapers …

This chapter applies to all persons doing insurance business notwithstanding any provision exempting them from the insurance laws of this title. Source: SL 1992, ch 357 , § 25.

A qualified independent certified public accountant may enter into an agreement with an insurer to have disputes relating to an audit resolved by mediation or arbitration. However, if a delinquency proceeding commenced against the insurer under chapter 58-29B , the mediation or a…

Foreign or alien insurers, filing audited financial reports in another state which report has been found by the director to be substantially similar to the requirements of § 58-43-4 , are exempt if: (1) A copy of the audited financial report, communication of internal control rel…

The annual audited financial report shall report the financial position of the insurer as of the end of the most recent calendar year and the results of its operations, cash flows, and changes in capital and surplus for the year then ended. The audit shall reflect the statutory a…