California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 3 - Insurers
Article 3.3 - Annual Financial Reporting
Section 2309.2 - Purpose and Scope
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
The purpose of these regulations is to improve surveillance by the California Department of Insurance of the financial condition of insurers by requiring (1) an annual audit of financial statements reporting the financial position and the results of operations of insurers by independent certified public accountants; (2) Communication of Internal Control Related Matters Noted in an Audit; and (3) Management's Report of Internal Control over Financial Reporting.
Every insurer (as defined in Section 2309.3) shall be subject to these regulations; however, insurers having direct premiums written in this state of less than $1,000,000 in any calendar year and fewer than 1,000 policyholders or certificate holders of direct written policies nationwide at the end of the calendar year shall be exempt from these regulations for the year (unless the commissioner makes a specific finding that compliance is necessary for the commissioner to carry out statutory responsibilities) except that insurers having assumed premiums pursuant to contracts and/or treaties of reinsurance of $1,000,000 or more will not be so exempt.
Foreign or alien insurers filing the Audited financial reports 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 herein, are exempt from Sections 2309.4 through 2309.13 of these regulations 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 Sections 2309.4, 2309.11 and 2309.12, respectively (Canadian insurers may submit accountants' reports as filed with the Office of the Superintendent of Financial Institutions, Canada).
(b) 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 Section 2309.10.
Foreign or alien insurers required to file Management's Report of Internal Control over Financial Reporting in another state are exempt from filing the Report in this state provided the other state has substantially similar reporting requirements and the Report is filed with the commissioner of the other state within the time specified.
These regulations shall not prohibit, preclude or in any way limit the commissioner from ordering or conducting or performing examinations of insurers under any provision of the California Insurance Code or the rules, regulations, practices, and procedures of the Department of Insurance.
1. New article 3.3 (sections 2309.2-2309.20) and section filed 12-7-2009; operative 1-1-2010 pursuant to Government Code section 11343.4 (Register 2009, No. 50).
Note: Authority cited: Sections 900.2 and 925.4, Insurance Code. Reference: Sections 730, 731, 732, 733, 734, 734.1, 735, 735.5, 736, 736.5, 737, 900.2 and 925.4, Insurance Code.
