R590-254-2. Purpose and Scope

(1) The purpose of this rule is to improve the commissioner's surveillance of the financial condition of insurers by requiring the submission of the following reports and documents:

(a) an annual audit of financial statements reporting the financial position and the results of operations of insurers by independent certified public accountants,

(b) communication of internal control related matters noted in an audit; and

(c) management's Report of Internal Control over Financial Reporting.

(2) This rule applies to every insurer, as defined in R590-254-3.

(3) An insurer shall be exempt from this rule for the calendar year if an insurer:

(a) has direct written premium of less than $1,000,000 written in this state in any calendar year; and

(b) less than 1,000 policyholders or certificate holders of direct written policies nationwide at the end of the calendar year.

(4) The exemption under R590-254-2(3)(a) and (b) shall apply unless:

(a) the commissioner makes a specific finding that compliance is necessary for the commissioner to carry out statutory responsibilities; or

(b) the insurer has assumed premiums pursuant to contracts and treaties, or both, of reinsurance of $1,000,000 or more.

(5) A foreign or alien insurer filing an audited financial report in another state, pursuant to that state's requirement for filing of audited financial reports, which has been found by the commissioner to be substantially similar to the requirements in this rule, is exempt from R590-254 Sections 4 through 13 if:

(a) a copy of the audited financial report, Communication of Internal Control Related Matters Noted in an Audit, and the Accountant's Letter of Qualifications that are filed with the other state are filed with the commissioner in accordance with the filing dates specified in R590-254 Sections 4, 11 and 12, respectively; or

(b) a Canadian insurer may submit accountants' reports as filed with the Office of the Superintendent of Financial Institutions, Canada; and

(c) a copy of any Notification of Adverse Financial Condition Report filed with the other state is filed with the commissioner within the time specified in R590-254-10.

(6) A foreign or alien insurer required to file a Management's Report of Internal Control over Financial Reporting in another state is exempt from filing the Report in this state provided the other state has:

(a) substantially similar reporting requirements; and

(b) the report is filed with the commissioner of the other state within the time specified.

(7) This rule shall not prohibit, preclude or in any way limit the commissioner from ordering or conducting or performing examinations of insurers under the rules, practices and procedures of the department.