Alaska Administrative Code
Title 3 - Commerce, Community, and Economic Development
Part 2 - Division of Insurance
Chapter 21 - Insurer - Financial
Article 7 - Financial Examination of and Annual Audit Reporting Requirements for Admitted Insurers
3 AAC 21.770 - Audit committee

(a) The audit committee of an entity that

(b) The provisions of (c) through (n) of this section do not apply to

(c) The audit committee of an insurer shall

(d) Each member of the audit committee must be a member of the governing board of the insurer or a member of the governing board of an entity designated under (h) of this section.

(e) With the exception of actions taken in the capacity of a member of the audit committee, the board of directors, or any other board committee of the insurer, to be considered independent for purposes of this section, a member of the audit committee may not

(f) If a law requires board participation by a non-independent member as described in (e) of this section, that member may participate in the audit committee and be designated as independent for audit committee purposes unless the non-independent member is an officer or employee of the insurer or an affiliate of the insurer.

(g) If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, the member may, with notice by the insurer to the director, remain on the audit committee until the earlier of the next annual meeting of the insurer or one year from the occurrence of the event that caused the member to be no longer independent.

(h) If the controlling person elects to designate the audit committee, the ultimate controlling person as defined in 3 AAC 21.195 shall provide written notice to the director. Notification must be made no more than 30 days after the election or 30 days before the issuance of the next annual audited financial report, whichever is earlier. The notice must include a description of the basis for the election made by the controlling person. The election can be changed through notice to the director by the insurer, which must include a description of the basis for the change. The election must remain in effect until it is rescinded.

(i) The audit committee shall require the accountant to timely report to the audit committee in accordance with generally accepted auditing standards, including the reporting of

(j) If an insurer is a member of an insurance holding company system, the reports required in (i) of this section may be provided to the audit committee on an aggregate basis, if any substantial differences among insurers in the system are identified to the audit committee separately.

(k) The minimum required proportion of independent audit committee members based on the amount of direct written and assumed premium from nonaffiliates reported for the prior year in the most recently filed annual financial statement of the insurer is as follows:

(l) The director may require the insurer's governing board to increase the proportion of independent audit committee members if the insurer

(m) If an insurer has direct written and assumed premium from nonaffiliates in an amount less than $500,000,000, excluding premiums reinsured with the Federal Crop Insurance Corporation established under 7 U.S.C. 1501 - 1524 and the national flood insurance program established under 42 U.S.C. 4001 - 4129, the insurer may apply to the director for a waiver from this section based upon hardship. If the waiver is granted, the insurer shall include a copy of the waiver with its annual statement filing to

(n) An insurer that is not required to have independent audit committee members or only a simple majority of independent audit committee members because the total written and assumed premium is below the applicable threshold in (k) of this section but subsequently becomes subject to one of the minimum independent board member requirements under (k) of this section due to changes in premium has one calendar year following the year the threshold is exceeded to comply with those requirements. An insurer that becomes subject to one of those requirements as a result of a business combination has one calendar year following the date of acquisition or combination to comply with the independent board member requirement.

(o) The audit committee of an insurer or group of insurers shall be responsible for overseeing the insurer's Internal audit function and granting the person or persons performing the function suitable authority and resources to fulfill their responsibilities if required by 3 AAC 21.780 of this regulation.