CHAPTER 3.1. EXAMINATIONS
IC 27-1-3.1
Chapter 3.1. Examinations
IC 27-1-3.1-1
Commissioner
Sec. 1. As used in this chapter, "commissioner" refers to theinsurance commissioner appointed under IC 27-1-1-2.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-2
Company
Sec. 2. As used in this chapter, "company" means any personengaging in or proposing or attempting to engage in any transactionor kind of insurance or surety business and any person or group ofpersons who may otherwise be subject to the administrative,regulatory, or taxing authority of the commissioner.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-3
Department
Sec. 3. As used in this chapter, "department" refers to thedepartment of insurance of Indiana.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-4
Examiner
Sec. 4. As used in this chapter, "examiner" means any individualor firm authorized by the commissioner to conduct an examinationunder this chapter.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-5
Insurer
Sec. 5. As used in this chapter, "insurer" has the meaning set forthin IC 27-1-2-3.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-6
NAIC examiner's handbook
Sec. 6. As used in this chapter, "NAIC examiner's handbook"means the Examiners' Handbook adopted by the NationalAssociation of Insurance Commissioners.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-7
Person
Sec. 7. As used in this chapter, "person" means any individual,aggregation of individuals, trust, association, partnership, limitedliability company, or corporation, or any affiliate of these entities.
As added by P.L.26-1991, SEC.5. Amended by P.L.8-1993, SEC.410.
IC 27-1-3.1-8
Procedure
Sec. 8. (a) The commissioner or any of the commissioner'sexaminers:
(1) may conduct an examination under this chapter of anycompany as often as the commissioner, in the commissioner'ssole discretion, considers appropriate; and
(2) shall, at a minimum, conduct an examination of everyinsurer licensed in Indiana at least once every five (5) years.
(b) In scheduling and determining the nature, scope, andfrequency of the examinations, the commissioner shall consider suchmatters as the results of financial statement analyses and ratios,changes in management or ownership, actuarial opinions, reports ofindependent certified public accountants, and other criteria as setforth in the NAIC examiner's handbook.
(c) For purposes of completing an examination of any companyunder this chapter, the commissioner may examine or investigate anyperson, or the business of any person, in so far as such examinationor investigation is, in the sole discretion of the commissioner,necessary or material to the examination of the company.
(d) In lieu of an examination under this chapter of any foreign oralien insurer licensed in Indiana, the commissioner may accept anexamination report on such company as prepared by the insurancedepartment of the company's state of domicile or port-of-entry stateuntil January 1, 1994. After January 1, 1994, those reports may onlybe accepted if:
(1) the insurance department that prepared the report was at thetime of the examination accredited under the NationalAssociation of Insurance Commissioners' Financial RegulationStandards and Accreditation Program; or
(2) the examination is performed with the participation of one(1) or more examiners who are employed by an accredited StateInsurance Department and who after a review of theexamination work papers and report state under oath that theexamination was performed in a manner consistent with thestandards and procedures required by their insurancedepartment.
As added by P.L.26-1991, SEC.5. Amended by P.L.1-1992, SEC.144.
IC 27-1-3.1-9
Warrant; access to information; refusal; penalties; subpoenas;oaths; order to appear; evidence
Sec. 9. (a) Upon determining that an examination should beconducted, the commissioner or the commissioner's designee shallissue an examination warrant appointing one (1) or more examinersto perform the examination and instructing them as to the scope ofthe examination. In conducting the examination, the examiner shallobserve those guidelines and procedures set forth in the NAICexaminer's handbook. The commissioner may also employ such otherguidelines or procedures as the commissioner considers appropriate.
The commissioner is not required to issue an examination warrant fora data call.
(b) Every company or person from whom information is sought,and the officers, directors, and agents of the company or person,must provide to the examiners appointed under subsection (a) timely,convenient, and free access at all reasonable hours at its offices to allbooks, records, accounts, papers, documents, and any or all computeror other recordings relating to the property, assets, business, andaffairs of the company being examined. The officers, directors,employees, and agents of the company or person must facilitate theexamination and aid in the examination so far as it is in their powerto do so. The refusal of any company, by its officers, directors,employees, or agents within the company's control, to submit toexamination or to comply with any reasonable written request of theexaminers, or the failure of any company to make a good faith effortto require compliance with such a request, is grounds for:
(1) suspension;
(2) refusal; or
(3) nonrenewal;
of any license or authority held by the company to engage in aninsurance or other business subject to the commissioner'sjurisdiction. The commissioner may proceed to suspend or revoke alicense or authority upon the grounds set forth in this subsectionunder IC 27-1-3-10 or IC 27-1-3-19.
(c) The commissioner and the commissioner's examiners mayissue subpoenas, administer oaths, and examine under oath anyperson as to any matter pertinent to an examination conducted underthis chapter. Upon the failure or refusal of any person to obey asubpoena, the commissioner may petition a court of competentjurisdiction, and upon proper showing, the court may enter any ordercompelling the witness to appear and testify or produce documentaryevidence. Failure to obey the court order is punishable as contemptof court.
(d) When making an examination under this chapter, thecommissioner may retain attorneys, appraisers, independentactuaries, independent certified public accountants, or otherprofessionals and specialists as examiners. The cost of retainingthese examiners shall be borne by the company that is the subject ofthe examination.
(e) This chapter does not limit the commissioner's authority toterminate or suspend any examination in order to pursue other legalor regulatory action pursuant to this title. Findings of fact andconclusions made pursuant to any examination shall be prima facieevidence in any legal or regulatory action.
As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.8;P.L.116-1994, SEC.12; P.L.111-2008, SEC.1.
IC 27-1-3.1-10
Reports
Sec. 10. (a) All examination reports shall be comprised of only: (1) facts:
(A) appearing upon the books, records, or other documentsof the company; and
(B) ascertained from the agents or other persons examined,or as ascertained from the testimony of its officers or agentsor other persons examined concerning the affairs of thecompany; and
(2) conclusions and recommendations that the examiners findreasonably warranted from those facts.
(b) No more than sixty (60) days after the completion of theexamination, the examiner in charge shall file with the department averified written report of examination under oath. Upon receipt ofthe verified report, the department shall transmit the report to thecompany examined, together with a notice that affords such companyexamined a reasonable opportunity of not more than thirty (30) daysto make a written submission or rebuttal with respect to any matterscontained in the examination report. The thirty (30) day period maybe extended if the commissioner, in the commissioner's solediscretion, determines that an extension is appropriate or necessary.
As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994, SEC.9;P.L.116-1994, SEC.13.
IC 27-1-3.1-11
Review of report; order
Sec. 11. (a) Within thirty (30) days after the end of the periodallowed for the receipt of written submissions or rebuttals, thecommissioner shall fully consider and review the report, togetherwith any written submissions or rebuttals and any relevant portionsof the examiner's workpapers, and enter an order:
(1) adopting the examination report as filed or withmodification or corrections;
(2) rejecting the examination report with directions to theexaminers to reopen the examination for purposes of obtainingadditional data, documentation or information, and refiling thereport under this chapter; or
(3) calling for an investigatory hearing with no less than twenty(20) days notice to the company for purposes of obtainingadditional documentation, data, information and testimony.
(b) If the examination report reveals that the company is operatingin violation of any law, regulation, or prior order of thecommissioner, the commissioner may order the company to take anyaction the commissioner considers necessary and appropriate to curethat violation.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-12
Orders; findings and conclusions; appeal; hearing
Sec. 12. (a) All orders entered under section 11(a) of this chaptershall be accompanied by findings and conclusions resulting from thecommissioner's consideration and review of the examination report,
relevant examiner workpapers, and any written submissions orrebuttals.
(b) Any order entered under section 11(a) of this chapter shall beconsidered a final administrative decision that may be appealedunder IC 4-21.5-5, and shall be served upon the company by certifiedmail, together with a copy of the adopted examination report. Withinthirty (30) days of the issuance of the adopted report, the companyshall file an affidavit stating that each director has received a copy ofthe adopted report and related orders.
(c) Any hearing conducted under section 11(a)(3) of this chapterby the commissioner or an authorized representative shall beconducted as a nonadversarial confidential investigatory proceedingas necessary for the resolution of any inconsistencies, discrepancies,or disputed issues apparent upon the face of the filed examinationreport or raised by or as a result of the commissioner's review ofrelevant workpapers or by the written submission or rebuttal of thecompany. Within twenty (20) days of the conclusion of the hearing,the commissioner shall enter an order under section 11 of thischapter.
As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994,SEC.10; P.L.116-1994, SEC.14.
IC 27-1-3.1-13
Hearing
Sec. 13. (a) The commissioner may not appoint an examiner asauthorized representative to conduct a hearing. The hearing shallproceed expeditiously with discovery by the company limited to theexaminer's workpapers which tend to substantiate any assertions setforth in any written submission or rebuttal. The commissioner or thecommissioner's representative may issue subpoenas for theattendance of any witnesses or the production of any documentsdeemed relevant to the investigation whether under the control of thedepartment, the company, or other persons. The documents producedshall be included in the record and testimony taken by thecommissioner or the commissioner's representative shall be underoath and preserved for the record.
(b) This section does not require the department to disclose anyinformation or records which would indicate or show the existenceor content of any investigation or activity of a criminal justiceagency.
(c) The hearing shall proceed with the commissioner or thecommissioner's representative posing questions to the personssubpoenaed. Thereafter, the company and the department maypresent testimony relevant to the investigation. The commissioner,the department, and the company may cross-examine witnesses. Thecompany and the department shall be permitted to make closingstatements and may be represented by counsel of their choice.
As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994,SEC.11; P.L.116-1994, SEC.15.
IC 27-1-3.1-14
Confidentiality of report; public inspection; disclosures
Sec. 14. (a) Upon the adoption of an examination report undersection 11(a)(1) of this chapter, the commissioner shall continue tohold the content of the examination report as confidentialinformation for a period of thirty (30) days except to the extentprovided in section 10(b) of this chapter. Thereafter, the report shallbe open for public inspection.
(b) This chapter does not prevent or prohibit the commissionerfrom disclosing the content of an examination report, preliminaryexamination report, or results, or any matter relating thereto, to theinsurance department of any other state or country, or to lawenforcement officials of Indiana or any other state or agency of thefederal government at any time, if the agency or office receiving thereport or matters relating thereto agrees in writing to hold itconfidential and in a manner consistent with this chapter.
(c) If the commissioner determines that regulatory action isappropriate as a result of any examination, the commissioner mayinitiate any proceedings or actions authorized by law.
(d) This chapter does not limit the commissioner's authority to useand, if appropriate, to make public any final or preliminaryexamination report, any examiner or company workpapers or otherdocuments, or any other information discovered or developed duringthe course of any examination in the furtherance of any legal orregulatory action that the commissioner may, in the commissioner'ssole discretion, consider appropriate.
As added by P.L.26-1991, SEC.5. Amended by P.L.130-1994,SEC.12; P.L.116-1994, SEC.16.
IC 27-1-3.1-15
Working papers, recorded information, and documents;confidentiality
Sec. 15. All working papers, recorded information, documents,and copies thereof produced by, obtained by, or disclosed to thecommissioner or any other person in the course of an examinationunder this chapter are confidential for the purposes of IC 5-14-3-4,are not subject to subpoena, and may not be made public by thecommissioner or any other person, except to the extent provided insection 14 of this chapter. However, access may also be granted tothe National Association of Insurance Commissioners. Those partiesmust agree in writing prior to receiving the information to provide toit the same confidential treatment as required by this section, unlessthe prior written consent of the company to which it pertains hasbeen obtained.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-16
Appointment of examiner; conflict of interest; support staff
Sec. 16. (a) No examiner may be appointed by the commissionerif that examiner, either directly or indirectly, has a conflict of interest
or is affiliated with the management of or owns a pecuniary interestin any person subject to examination under this chapter. However,this section does not automatically preclude an examiner from being:
(1) a policyholder or claimant under an insurance policy;
(2) a grantor of a mortgage or similar instrument on theexaminer's residence to a regulated entity if done undercustomary terms and in the ordinary course of business;
(3) an investment owner in shares of regulated diversifiedinvestment companies; or
(4) a settlor or beneficiary of a "blind trust" into which anyotherwise impermissible holdings have been placed.
(b) Notwithstanding the requirements of this section, thecommissioner may periodically retain on an individual basisqualified actuaries, certified public accountants, and other similarindividuals who are independently practicing their professions, eventhough those persons may from time to time be similarly employedor retained by persons subject to examination under this chapter.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-17
Liability of commissioner, authorized representative, or examiner;attorney's fees
Sec. 17. (a) No cause of action shall arise nor shall any liability beimposed against the commissioner, the commissioner's authorizedrepresentatives or any examiner appointed by the commissioner forany statements made or conduct performed in good faith whilecarrying out the provisions of this chapter.
(b) No cause of action may arise, and no liability be imposedagainst any person for the act of communicating or deliveringinformation or data to the commissioner or the commissioner'sauthorized representative or examiner pursuant to an examinationmade under this chapter, if that act of communication or delivery isperformed in good faith and without fraudulent intent or the intent todeceive.
(c) This section does not abrogate or modify in any way anycommon law or statutory privilege or immunity enjoyed by anyperson identified in subsection (a).
(d) A person identified in subsection (a) is entitled to an award ofattorney's fees and costs if that person is the prevailing party in acivil cause of action for libel, slander or any other relevant tortarising out of that person's activities in carrying out the provisions ofthis chapter and if the court finds the action was frivolous,unreasonable, groundless, or litigated in bad faith.
As added by P.L.26-1991, SEC.5.
IC 27-1-3.1-18
Financial analysis ratios; written requests; examination synopses;confidentiality
Sec. 18. (a) The commissioner shall provide any financial analysisratios computed by the Insurance Regulatory Information System of
the National Association of Insurance Commissioners within five (5)business days after receiving a written request for those ratios.
(b) All examination synopses concerning insurance companiesthat are submitted to the department by the Insurance RegulatoryInformation System of the National Association of InsuranceCommissioners are confidential and may not be disclosed by thedepartment.
As added by P.L.26-1991, SEC.5.