Title 58, INSURANCE

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 § 58-43-16.6 . Source: SL 2009, ch 271 , § 18, eff. Jan. 1, 2010.

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…

The financial statements included in the audited financial report shall be prepared in a form and using language and groupings substantially the same as the relevant sections of the annual statement filed pursuant to § 58-6-75 and the financial statement shall be comparative, pre…

Financial statements furnished pursuant to § 58-43-4 shall be examined by the independent certified public accountant. The audit of the insurer's financial statements shall be conducted in accordance with generally accepted auditing standards. In accordance with AU Section 319 of…

Each insurer required to file an annual audited financial report shall, within sixty days after becoming subject to the requirement, register with the director in writing the name and address of the independent certified public accountant or accounting firm retained to conduct th…

If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns, the insurer shall mail notification to the director within five business days of the dismissal or resignation. The insurer shall mail the director a separ…

The disagreements required in § 58-43-7 to be reported include both those resolved to the former accountant's satisfaction and those not resolved to the former accountant's satisfaction. Disagreements contemplated by this section are those that occur at the decision - making leve…

An accountant shall be recognized as qualified as long as the accountant conforms to the standards of the profession, as contained in the Code of Professional Ethics of the American Institute of Certified Public Accountants and the requirements of chapter 36-20B and rules promulg…

No person or firm may be recognized as a qualified independent certified public accountant if the person or firm: (1) Is not in conformity with the Code of Professional Ethics of the American Institute of CPA's and in all states in which the accountant is licensed to practice, or…

The director may not recognize as a qualified independent certified public accountant, nor accept an annual audited financial report, prepared in whole or in part by an accountant who provides to an insurer, contemporaneously with the audit, the following nonaudit services: (1) B…

Any insurer having direct written and assumed premiums of less than one hundred million dollars in any calendar year may request an exemption from the provisions of § 58-43-9.2 . The insurer shall file with the director a written statement discussing the reasons why the insurer s…

A qualified independent certified public accountant who performs the audit may engage in other nonaudit services, including tax services, that are not described in or that do not conflict with the provisions of § 58-43-9.2 , only if the activity is approved in advance by the audi…

Any auditing services or nonaudit services provided to an insurer by the qualified independent certified public accountant of the insurer shall be preapproved by the audit committee. This preapproval requirement is waived with respect to nonaudit services if the insurer is a SOX …

The audit committee may delegate to one or more designated members of the audit committee the authority to grant the preapprovals required by the provisions of § 58-43-9.5 . The decisions of any member to whom this authority is delegated shall be presented to the full audit commi…

The director may not recognize an independent certified public accountant as qualified for a particular insurer if a member of the board, president, chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent posi…

Terms used in this chapter mean: (1) "Accredited state," any state in which the insurance department or regulatory agency has qualified as meeting the minimum financial regulatory standards promulgated and established by the National Association of Insurance Commissioners (NAIC);…

If an order for liquidation or rehabilitation of the controlled insurer has been entered pursuant to chapter 58-29B , and the receiver appointed under that order believes that the controlling broker or any other person has not complied with this chapter, or any regulation or orde…

Nothing contained in this section affects the right of the director to impose any other penalties provided for in this title. Source: SL 1992, ch 358 , § 11.

Nothing contained in this section alters or affects the rights of policyholders, claimants, creditors, or other third parties. Source: SL 1992, ch 358 , § 12.

Controlled insurers and controlling brokers who are not in compliance with §§ 58-44-3 to 58-44-7 , inclusive, on July 1, 1992, shall have sixty days to come into compliance and shall comply with § 58-44-8 beginning with all policies written or renewed on or after September 30, 19…

The director may disapprove the contract in § 58-44-5 pursuant to §§ 58-5-85 and 58-5-86 if it would adversely affect the insurer or would violate any law. Source: SL 1992, ch 358 , § 14.

The director may promulgate rules, pursuant to chapter 1-26 , for accreditation; requirements for insurers, agents, or brokers, whether controlled or not; contracts between the parties; bank accounts; standards of disapproval of the contracts between the parties; reporting requir…

This chapter applies to all persons doing insurance business notwithstanding any provision in this title which exempts them from other insurance laws except any insurer licensed pursuant to chapter 58-35 which does not have more than one million dollars in direct written premiums…