§ 27-71-7 - Protocols for targeted market conduct examinations.
SECTION 27-71-7
§ 27-71-7 Protocols for targeted marketconduct examinations. – (a) When the commissioner identifies through market analysis a pattern ofconduct or practice by an insurer which requires further investigation, andless intrusive market conduct actions identified in subsection 27-71-5(b) arenot appropriate, the commissioner has the discretion to conduct targeted,market conduct examinations in accordance with the NAIC Market Conduct UniformExamination Procedures and the Market Regulation Handbook (or procedures,adopted by regulation, that are substantially similar to the foregoing NAICproducts).
(b) If the insurer to be examined is not a domestic insurer,the commissioner may communicate with and may coordinate the examination withthe insurance commissioner of the state in which the insurer is organized.
(c) Concomitant with the notification requirementsestablished in subsection (e) of this section, the commissioner shall postnotification on the NAIC Examination Tracking System, or comparable NAICproduct as determined by the commissioner, that a market conduct examinationhas been scheduled.
(d) The commissioner may not conduct a comprehensive marketconduct examination more frequently than once every three (3) years. Thecommissioner may decide not to conduct a comprehensive market conductexamination based on market analysis.
(e) Prior to commencement of a targeted on-site marketconducted examination, market conduct surveillance personnel shall prepare awork plan and proposed budget. Such proposed budget, which shall be reasonablefor the scope of the examination, and work plan shall be provided to thecompany under examination.
(2) Market conduct examinations shall, to the extentfeasible, utilize desk examinations and data requests prior to a targetedon-site examination.
(3) Market conduct examinations shall be conducted inaccordance with the provisions set forth the in the NAIC Market RegulationHandbook and the NAIC Market Conduct Uniform Examinations Procedures (orprocedures, adopted by regulation, that are substantially similar to theforegoing NAIC products).
(4) Prior to the conclusion of a market conduct examination,the individual among the market conduct surveillance personnel who isdesignated as the examiner-in-charge shall schedule an exit conference with theinsurer.
(f) Announcement of the examination shall be sent to theinsurer and posted on the NAIC's Examination Tracking System (or comparableNAIC product, as determined by the commissioner) as soon as possible but in nocase later than sixty (60) days before the estimated commencement of theexamination, unless extraordinary circumstances indicating a risk to consumersrequires immediate action. Such announcement to the insurer shall contain:
(1) The name and address of the insurer(s) being examined;
(2) The name and contact information of theexaminer-in-charge;
(3) The reason(s) for and the scope of the targetedexamination;
(4) The date the examination is scheduled to begin;
(5) Identification of any non-insurance department personnelwho will assist in the examination, if known at the time the notice is prepared;
(6) A time estimate for the examination;
(7) A budget and work plan for the examination andidentification of reasonable and necessary costs and fees that will be includedin the bill, if the cost of the examination is billed to the company; and
(8) A request for the insurer to name its examinationcoordinator.
(g) If a targeted examination is expanded beyond the reasonsprovided to the insurer in the notice of the examination required under thissection, the commissioner shall provide written notice to the insurer,explaining the extent of the expansion and the reasons for the expansion. Thedepartment shall provide a revised work plan to the insurer before thebeginning of any significantly expanded examination, unless extraordinarycircumstances indicating a risk to consumers require immediate action.
(h) The commissioner shall conduct a pre-examinationconference with the insurer examination coordinator and key personnel toclarify expectations thirty (30) days prior to commencement of the examination.
(i) The department shall use the NAIC Standard Data Request(or comparable product, adopted by regulation, that is substantially similar tothe foregoing NAIC product).
(1) A company responding to a commissioner's request toproduce information shall produce it as it is kept in the usual course ofbusiness or shall organize and label it to correspond with the categories inthe demand.
(2) If a commissioner's request does not specify the form orforms for producing electronically stored information, a company responding tothe request must produce the information in a form or forms in which thecompany ordinarily maintains it or in a form or forms that are reasonablyusable.
(3) A company responding to an information request need notproduce the same electronically stored information in more than one form.
(j) The commissioner shall adhere to the following timeline,unless a mutual agreement is reached with the insurer to modify the timeline:
(a) The commissioner shall deliver the draft report to theinsurer within sixty (60) days of the completion of the examination. Completionof the examination shall be defined as the date the commissioner confirms inwriting that the examination is completed.
(b) The insurer must respond with written comments withinthirty (30) days of receipt of the draft report.
(c) The department shall make a good faith effort to resolveissues and prepare a final report within thirty (30) days of receipt of theinsurer's written comments, unless a mutual agreement is reached to extend thedeadline. The commissioner may make corrections and other changes, asappropriate.
(d) The insurer shall, within thirty (30) days, of receipt ofthe final report, file a written response to all comments and recommendationscontained in the report. The response shall include a written plan of how andwhen the comments and recommendations contained in the examination report willbe corrected and/or implemented. For each comment and recommendation, theresponse must include an implementation date and a completion date for eachcorrective action. In lieu of these requirements, the company may submit arebuttal to any comment or recommendation contained in the examination report.An additional thirty (30) days shall be allowed if agreed to by thecommissioner and the insurer.
(2) The final written and electronic publicly availablemarket conduct report shall include the insurer's written response and anyagreed-to corrections or changes. The response may be included either as anappendix or in text of the examination reports. References to specificindividuals by name shall be limited to an acknowledgement of their involvementin the conduct of the examination.
(k) Upon adoption of the examination report pursuant tosubsections 27-13.1-5(c) – (f), the commissioner shall continue to holdthe content of the examination report as private and confidential for a periodof thirty (30) days, except to the extent provided in the paragraph (k)(2) ofthis subsection herein. During this time, the report shall not be subject tosubpoena and shall not be subject to discovery or admissible in evidence in anyprivate action. Thereafter, the commissioner shall open the report for publicinspection, provided no court of competent jurisdiction has stayed itspublication. This section may not be construed to limit the commissioner'sauthority to use any final or preliminary market conduct examination report,and examiner or company work papers or other documents, or any otherinformation discovered or developed during the course of an examination in thefurtherance of any legal or regulatory action that the commissioner, in thecommissioner's sole discretion may deem appropriate.
(2) Nothing contained in this chapter shall prevent or beconstrued as preventing the commissioner from disclosing the content of anexamination report, preliminary examination report or results, or any matterrelating thereto, to the insurance department of this or any other state oragency of the federal government at any time, provided the agency or officereceiving the report or matters relating thereto agrees to hold it confidentialand in a manner consistent with this chapter.
(l) The insurer may appeal the order adopting the examinationreport in accordance with the procedures set forth in subsection 27-13.1-5(d)and the administrative procedures act, title 42, chapter 35.