(a) This section shallnot apply to foreign or alien insurers licensed in this State or an insurerthat is a SOX‑compliant entity or a direct or indirect wholly ownedsubsidiary of a SOX‑compliant entity.
(b) The audit committeeshall be directly responsible for the appointment, compensation, and oversightof the work of any accountant, including resolution of disagreements betweenmanagement and the accountant regarding financial reporting, for the purpose ofpreparing or issuing the audited financial report or related work. Eachaccountant shall report directly to the audit committee.
(c) Each member of theaudit committee shall be a member of the board of directors of the insurer or amember of the board of directors of an entity elected pursuant to subsection(f) of this section and G.S. 58‑10‑190(3).
(d) In order to beconsidered independent for purposes of this section, a member of the auditcommittee shall not, other than in his or her capacity as a member of the auditcommittee, the board of directors, or any other board committee, accept anyconsulting, advisory, or other compensatory fee from the entity or be anaffiliated person of the entity or any subsidiary of the entity. However, ifNorth Carolina law requires board participation by otherwise nonindependentmembers, that law shall prevail and such members may participate in the auditcommittee and be designated as independent for audit committee purposes, unlessthey are an officer or employee of the insurer or one of its affiliates.
(e) If a member of theaudit committee ceases to be independent for reasons outside the member'sreasonable control, that person, with notice by the responsible entity to theCommissioner, may remain an audit committee member of the responsible entityuntil the earlier of the next annual meeting of the responsible entity or oneyear from the occurrence of the event that caused the member to be no longerindependent.
(f) To exercise theelection of the controlling person to designate the audit committee, theultimate controlling person shall provide written notice of the affectedinsurers to the Commissioner. Notification shall be made timely before theissuance of the statutory audit report and include a description of the basisfor the election. The election can be changed through notice to theCommissioner by the insurer, which shall include a description of the basis forthe change. The election shall remain in effect for perpetuity, untilrescinded.
(g) Reports From Accountant.
(1) The audit committeeshall require the accountant that performs for an insurer any audit required bythis Part to timely report to the audit committee in accordance with therequirements of "Statement on Auditing Standards No. 61 of the AICPA ProfessionalStandards, Communication with Audit Committees," or its replacement,including all of the following:
a. All significantaccounting policies and material permitted practices.
b. All materialalternative treatments of financial information within statutory accountingprinciples that have been discussed with management officials of the insurer,ramifications of the use of the alternative disclosures and treatments, and thetreatment preferred by the accountant.
c. Other materialwritten communications between the accountant and the management of theinsurer, such as any management letter or schedule of unadjusted differences.
(2) If an insurer is amember of an insurance holding company system, the reports required bysubdivision (1) of subsection (g) of this section may be provided to the auditcommittee on an aggregate basis for insurers in the holding company system,provided that any substantial differences among insurers in the system areidentified to the audit committee.
(h) The proportion ofindependent audit committee members shall meet or exceed the followingcriteria:
PriorCalendar Year Direct Written and Assumed Premiums
No minimum Majority(50% or more) Supermajority of members
requirements. ofmembers shall be (75% or more) shall be
independent. independent.
The Commissioner shall requirethe entity's board to enact improvements to the independence of the auditcommittee membership if the insurer is in a risk‑based capital actionlevel event, meets one or more of the standards of an insurer deemed to be inhazardous financial condition, or otherwise exhibits qualities of a troubledinsurer. The Commissioner may order any insurer with less than five hundred milliondollars ($500,000,000) in prior year direct written and assumed premiums tostructure its audit committee with at least a supermajority of independentaudit committee members. Prior calendar year direct written and assumedpremiums shall be the combined total of direct premiums and assumed premiumsfrom nonaffiliates for the reporting entities.
(i) An insurer withdirect written and assumed premiums, excluding premiums reinsured with theFederal Crop Insurance Corporation and Federal Flood Program, of less than fivehundred million dollars ($500,000,000) may apply to the Commissioner for awaiver from the requirements in this section based upon hardship. The insurershall file, with its annual statement filing, the approval for relief from thissection with the states in which it is licensed or doing business and with theNAIC. If the nondomestic state accepts electronic filing with the NAIC, theinsurer shall file the approval in an electronic format. (2009‑384, s. 1.)
(a) This section shallnot apply to foreign or alien insurers licensed in this State or an insurerthat is a SOX‑compliant entity or a direct or indirect wholly ownedsubsidiary of a SOX‑compliant entity.
(b) The audit committeeshall be directly responsible for the appointment, compensation, and oversightof the work of any accountant, including resolution of disagreements betweenmanagement and the accountant regarding financial reporting, for the purpose ofpreparing or issuing the audited financial report or related work. Eachaccountant shall report directly to the audit committee.
(c) Each member of theaudit committee shall be a member of the board of directors of the insurer or amember of the board of directors of an entity elected pursuant to subsection(f) of this section and G.S. 58‑10‑190(3).
(d) In order to beconsidered independent for purposes of this section, a member of the auditcommittee shall not, other than in his or her capacity as a member of the auditcommittee, the board of directors, or any other board committee, accept anyconsulting, advisory, or other compensatory fee from the entity or be anaffiliated person of the entity or any subsidiary of the entity. However, ifNorth Carolina law requires board participation by otherwise nonindependentmembers, that law shall prevail and such members may participate in the auditcommittee and be designated as independent for audit committee purposes, unlessthey are an officer or employee of the insurer or one of its affiliates.
(e) If a member of theaudit committee ceases to be independent for reasons outside the member'sreasonable control, that person, with notice by the responsible entity to theCommissioner, may remain an audit committee member of the responsible entityuntil the earlier of the next annual meeting of the responsible entity or oneyear from the occurrence of the event that caused the member to be no longerindependent.
(f) To exercise theelection of the controlling person to designate the audit committee, theultimate controlling person shall provide written notice of the affectedinsurers to the Commissioner. Notification shall be made timely before theissuance of the statutory audit report and include a description of the basisfor the election. The election can be changed through notice to theCommissioner by the insurer, which shall include a description of the basis forthe change. The election shall remain in effect for perpetuity, untilrescinded.
(g) Reports From Accountant.
(1) The audit committeeshall require the accountant that performs for an insurer any audit required bythis Part to timely report to the audit committee in accordance with therequirements of "Statement on Auditing Standards No. 61 of the AICPA ProfessionalStandards, Communication with Audit Committees," or its replacement,including all of the following:
a. All significantaccounting policies and material permitted practices.
b. All materialalternative treatments of financial information within statutory accountingprinciples that have been discussed with management officials of the insurer,ramifications of the use of the alternative disclosures and treatments, and thetreatment preferred by the accountant.
c. Other materialwritten communications between the accountant and the management of theinsurer, such as any management letter or schedule of unadjusted differences.
(2) If an insurer is amember of an insurance holding company system, the reports required bysubdivision (1) of subsection (g) of this section may be provided to the auditcommittee on an aggregate basis for insurers in the holding company system,provided that any substantial differences among insurers in the system areidentified to the audit committee.
(h) The proportion ofindependent audit committee members shall meet or exceed the followingcriteria:
PriorCalendar Year Direct Written and Assumed Premiums
No minimum Majority(50% or more) Supermajority of members
requirements. ofmembers shall be (75% or more) shall be
independent. independent.
The Commissioner shall requirethe entity's board to enact improvements to the independence of the auditcommittee membership if the insurer is in a risk‑based capital actionlevel event, meets one or more of the standards of an insurer deemed to be inhazardous financial condition, or otherwise exhibits qualities of a troubledinsurer. The Commissioner may order any insurer with less than five hundred milliondollars ($500,000,000) in prior year direct written and assumed premiums tostructure its audit committee with at least a supermajority of independentaudit committee members. Prior calendar year direct written and assumedpremiums shall be the combined total of direct premiums and assumed premiumsfrom nonaffiliates for the reporting entities.
(i) An insurer withdirect written and assumed premiums, excluding premiums reinsured with theFederal Crop Insurance Corporation and Federal Flood Program, of less than fivehundred million dollars ($500,000,000) may apply to the Commissioner for awaiver from the requirements in this section based upon hardship. The insurershall file, with its annual statement filing, the approval for relief from thissection with the states in which it is licensed or doing business and with theNAIC. If the nondomestic state accepts electronic filing with the NAIC, theinsurer shall file the approval in an electronic format. (2009‑384, s. 1.)
(a) This section shallnot apply to foreign or alien insurers licensed in this State or an insurerthat is a SOX‑compliant entity or a direct or indirect wholly ownedsubsidiary of a SOX‑compliant entity.
(b) The audit committeeshall be directly responsible for the appointment, compensation, and oversightof the work of any accountant, including resolution of disagreements betweenmanagement and the accountant regarding financial reporting, for the purpose ofpreparing or issuing the audited financial report or related work. Eachaccountant shall report directly to the audit committee.
(c) Each member of theaudit committee shall be a member of the board of directors of the insurer or amember of the board of directors of an entity elected pursuant to subsection(f) of this section and G.S. 58‑10‑190(3).
(d) In order to beconsidered independent for purposes of this section, a member of the auditcommittee shall not, other than in his or her capacity as a member of the auditcommittee, the board of directors, or any other board committee, accept anyconsulting, advisory, or other compensatory fee from the entity or be anaffiliated person of the entity or any subsidiary of the entity. However, ifNorth Carolina law requires board participation by otherwise nonindependentmembers, that law shall prevail and such members may participate in the auditcommittee and be designated as independent for audit committee purposes, unlessthey are an officer or employee of the insurer or one of its affiliates.
(e) If a member of theaudit committee ceases to be independent for reasons outside the member'sreasonable control, that person, with notice by the responsible entity to theCommissioner, may remain an audit committee member of the responsible entityuntil the earlier of the next annual meeting of the responsible entity or oneyear from the occurrence of the event that caused the member to be no longerindependent.
(f) To exercise theelection of the controlling person to designate the audit committee, theultimate controlling person shall provide written notice of the affectedinsurers to the Commissioner. Notification shall be made timely before theissuance of the statutory audit report and include a description of the basisfor the election. The election can be changed through notice to theCommissioner by the insurer, which shall include a description of the basis forthe change. The election shall remain in effect for perpetuity, untilrescinded.
(g) Reports From Accountant.
(1) The audit committeeshall require the accountant that performs for an insurer any audit required bythis Part to timely report to the audit committee in accordance with therequirements of "Statement on Auditing Standards No. 61 of the AICPA ProfessionalStandards, Communication with Audit Committees," or its replacement,including all of the following:
a. All significantaccounting policies and material permitted practices.
b. All materialalternative treatments of financial information within statutory accountingprinciples that have been discussed with management officials of the insurer,ramifications of the use of the alternative disclosures and treatments, and thetreatment preferred by the accountant.
c. Other materialwritten communications between the accountant and the management of theinsurer, such as any management letter or schedule of unadjusted differences.
(2) If an insurer is amember of an insurance holding company system, the reports required bysubdivision (1) of subsection (g) of this section may be provided to the auditcommittee on an aggregate basis for insurers in the holding company system,provided that any substantial differences among insurers in the system areidentified to the audit committee.
(h) The proportion ofindependent audit committee members shall meet or exceed the followingcriteria:
PriorCalendar Year Direct Written and Assumed Premiums
No minimum Majority(50% or more) Supermajority of members
requirements. ofmembers shall be (75% or more) shall be
independent. independent.
The Commissioner shall requirethe entity's board to enact improvements to the independence of the auditcommittee membership if the insurer is in a risk‑based capital actionlevel event, meets one or more of the standards of an insurer deemed to be inhazardous financial condition, or otherwise exhibits qualities of a troubledinsurer. The Commissioner may order any insurer with less than five hundred milliondollars ($500,000,000) in prior year direct written and assumed premiums tostructure its audit committee with at least a supermajority of independentaudit committee members. Prior calendar year direct written and assumedpremiums shall be the combined total of direct premiums and assumed premiumsfrom nonaffiliates for the reporting entities.
(i) An insurer withdirect written and assumed premiums, excluding premiums reinsured with theFederal Crop Insurance Corporation and Federal Flood Program, of less than fivehundred million dollars ($500,000,000) may apply to the Commissioner for awaiver from the requirements in this section based upon hardship. The insurershall file, with its annual statement filing, the approval for relief from thissection with the states in which it is licensed or doing business and with theNAIC. If the nondomestic state accepts electronic filing with the NAIC, theinsurer shall file the approval in an electronic format. (2009‑384, s. 1.)
