§ 23-81-807 - Examination.
23-81-807. Examination.
(a) (1) When the Insurance Commissioner deems it reasonably necessary to protect the interests of the public, the commissioner may examine the business and affairs of any licensee or applicant for a license.
(2) The commissioner may order any licensee or applicant to produce any records, books, files, or other information reasonably necessary to ascertain whether the licensee or applicant is acting or has acted in violation of the law or otherwise contrary to the interests of the public.
(3) The expenses incurred in conducting any examination shall be paid by the licensee or applicant.
(b) In lieu of an examination under this subchapter of any foreign or alien licensee licensed in this state, at the commissioner's discretion, the commissioner may accept an examination report on the licensee as prepared by the commissioner for the licensee's state of domicile or port-of-entry state.
(c) Names of and individual identification data for all owners and insureds shall be considered private and confidential information and shall not be disclosed by the commissioner unless required by law.
(d) Records of all consummated transactions and life settlement contracts shall be maintained by the provider for three (3) years after the death of the insured and shall be available to the commissioner for inspection during reasonable business hours.
(e) Conduct of Examinations.
(1) (A) Upon determining that an examination should be conducted, the commissioner shall issue an examination warrant appointing one (1) or more examiners to perform the examination and instructing them as to the scope of the examination.
(B) In conducting the examination, the examiner shall use methods common to the examination of any life settlement licensee and shall use those guidelines and procedures set forth in an examiner's handbook adopted by a national organization prescribed by rule of the commissioner.
(2) (A) Every licensee or person from whom information is sought, its officers, directors, and agents shall provide to the examiners timely, convenient, and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, assets, and computer or other recordings relating to the property, assets, business, and affairs of the licensee being examined.
(B) The officers, directors, employees, and agents of the licensee or person shall facilitate the examination and aid in the examination so far as it is in their power to do so.
(C) The refusal of a licensee or the licensee's officers, directors, employees, or agents to submit to examination or to comply with any reasonable written request of the commissioner shall be grounds for suspension or refusal of or nonrenewal of any license or authority held by the licensee to engage in the life settlement business or other business subject to the commissioner's jurisdiction.
(D) Any proceedings for suspension, revocation, or refusal of any license or authority shall be conducted pursuant to 23-61-301 et seq. and the Arkansas Administrative Procedure Act, 25-15-201 et seq.
(3) (A) The commissioner may issue subpoenas, administer oaths, and examine under oath any person as to any matter pertinent to the examination.
(B) Upon the failure or refusal of a person to obey a subpoena, the commissioner may petition a court of competent jurisdiction for an order to compel the witness to obey the subpoena, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence.
(4) When making an examination under this subchapter, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the licensee that is the subject of the examination.
(5) (A) This subchapter does not limit the commissioner's authority to terminate or suspend an examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state.
(B) Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action.
(6) Any information gathered during an examination as provided in this subchapter shall be deemed confidential pursuant to 23-61-207.
(f) Examination Reports.
(1) Examination reports shall be composed of only facts appearing upon the books, from the testimony of its officers or agents or other persons examined concerning its affairs, and such conclusions and recommendations as the examiners find reasonably warranted from the facts.
(2) (A) No later than sixty (60) days following completion of the examination, the examiner in charge shall file with the commissioner a verified written report of examination under oath.
(B) Upon receipt of the verified report, the commissioner shall transmit the report to the licensee that has been examined, together with a notice that shall afford the licensee that has been examined a reasonable opportunity of not more than thirty (30) days to make a written submission or rebuttal with respect to any matters contained in the examination report and which shall become part of the report or to request a hearing on any matter in dispute.
(3) If the commissioner determines that regulatory action is appropriate as a result of an examination, the commissioner may initiate any proceedings or actions provided by law.
(g) Confidentiality of Examination Information.
(1) Names and individual identification data for all owners, purchasers, and insureds shall be considered private and confidential information and shall not be disclosed by the commissioner unless the disclosure is to another regulator or is required by law.
(2) (A) Except as otherwise provided in this subchapter, all examination reports, working papers, recorded information, documents and copies thereof produced by, obtained by, or disclosed to the commissioner or any other person in the course of an examination made under this subchapter or in the course of analysis or investigation by the commissioner of the financial condition or market conduct of a licensee shall be confidential by law and privileged, shall not be open to inspection to the public or subject to disclosure under the Freedom of Information Act of 1967, 25-19-101 et seq., shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.
(B) The commissioner may use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties.
(C) The licensee being examined may have access to all documents used to make the report.
(h) Conflict of Interest.
(1) An examiner shall not be appointed by the commissioner if the examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under this subchapter. This subsection does not automatically preclude an examiner from being:
(A) An owner;
(B) An insured in a life settlement contract or insurance policy; or
(C) A beneficiary in an insurance policy that is proposed for a life settlement contract.
(2) Notwithstanding the requirements of this subsection, the commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or other similar individuals who are independently practicing their professions even though these persons may from time to time be similarly employed or retained by persons subject to examination under this subchapter.
(i) Immunity from Liability.
(1) A cause of action shall not arise nor shall any liability be imposed against the commissioner, the commissioner's authorized representatives, or any examiner appointed by the commissioner for any statements made or conduct performed in good faith while carrying out this subchapter.
(2) (A) A cause of action shall not arise, nor shall any liability be imposed against any person for the act of communicating or delivering information or data to the commissioner or the commissioner's authorized representative or examiner pursuant to an examination made under this subchapter if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive.
(B) This subsection does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in subdivision (i)(1) of this section.
(3) (A) A person identified in subdivision (i)(1) or subdivision (i)(2) of this section is entitled to an award of attorney's fees and costs if he or she is the prevailing party in a civil cause of action for libel, slander, or any other relevant tort arising out of activities in carrying out the provisions of this subchapter and the party bringing the action was not substantially justified in doing so.
(B) For purposes of this subsection, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.
(j) Investigative Authority of the Commissioner. The commissioner may investigate suspected fraudulent life settlement acts and persons engaged in the business of life settlements.
(k) Cost of Examinations. Costs of examinations under this subchapter shall be paid to the State Insurance Department to the same extent as examination expenses are imposed on persons pursuant to 23-61-206.