Current through Reg. 50, No. 187; September 24, 2024
(1) The Office
is required by Section
624.316(1)(a),
F.S., to examine the affairs, transactions, accounts, records and assets of
each authorized insurer and of the attorney in fact of a reciprocal insurer.
The examination standards with which the Office must comply are established by
statute and adopted by rule. The statutes and rules meet the requirements of
the National Association of Insurance Commissioners for accreditation in the
area of financial regulation. Any report received from another jurisdiction
pursuant to this rule is received for purposes of assessing the financial
condition of the insurer and not any other purpose. Any information contained
in such a report which would be the subject of a market conduct report prepared
by this Office is not relevant to this rule. The Office will be bound only by
the information relevant to the financial condition of the insurer.
(2) Section
624.316(2)(b),
F.S., requires the Office to examine each insurer applying for an initial
Certificate of Authority to transact business in this state before granting the
initial certificate. For purposes of this provision, the Office will, in the
absence of a reasonable belief that the examination report is not accurate,
accept the examination report of a foreign insurer as prepared by the insurance
office of the insurer's domiciliary state if the domiciliary insurance office
is accredited by the National Association of Insurance Commissioners in the
area of financial regulation or if the examination is performed under the
supervision of or with the participation of an examiner from a state which is
so accredited and who, after a review of the examination work papers and
report, state under oath that the examination was performed in a manner
consistent with the standards and procedures required by their Insurance
Office.
(3) Section
624.316(2)(c),
F.S., permits the Office, in lieu of making its own examination of a foreign
insurer, to accept a full report of the most recent examination of a foreign
insurer, as certified to by the insurance supervisory official of another
state. For purposes of this provision, the Office will, in the absence of a
reasonable belief that the examination report is not accurate, accept the
examination report of a foreign insurer as prepared by the insurance office of
the insurer's domiciliary state if the domiciliary insurance office is
accredited by the National Association of Insurance Commissioners in the area
of financial regulation or if the examination is performed under the
supervision of or with the participation of an examiner from a state which is
so accredited and who, after a review of the examination work papers and
report, states under oath that the examination was performed in a manner
consistent with the standards and procedures required by that Insurance Office.
Such reports of examination must be certified to by the insurance supervisory
official of the state of domicile and mailed to the Office within 10 calendar
days of receipt by the insurer, except that, if the report shows that the
insurer has materially misstated its financial condition or that the insurer
does not meet the minimum capital and surplus requirements of the Florida
Insurance Code, the report must be sent to the Office within 5 business days of
receipt using a facility that offers next day delivery service. A material
misstatement is defined as a collective amount of 10% or more of total assets,
total liabilities, or total capital and surplus.
(4) Section
624.316(2)(e),
F.S., allows the Office to conduct examinations of an insurer by contracting
for the services of an independent Certified Public Accountant, an actuary, a
reinsurance specialist, an investment specialist, information technology
specialist, or any combination of these individuals, as the particular
circumstances of the examination require. An examination performed pursuant to
this subsection must meet the requirements of subsection (1).
(a) An actuary meeting the criteria
established in Rule 69O-138.043 or
69O-170.031, F.A.C., will
qualify to conduct an examination under this subsection.
(b)
1. A
reinsurance specialist shall be qualified to conduct an examination under this
subsection if that contractor can demonstrate competency by education and
experience to perform such an examination. Competency by education and
experience shall be demonstrated if any one of the following is true:
a. An individual qualifies as an actuary
pursuant to either Rule
69O-138.043 or
69O-170.031, F.A.C., and has at
least one years' experience with the kind of reinsurance which will be the
subject of the examination.
b. An
individual has a bachelor's degree from an accredited college or university and
four years of professional experience in insurance/reinsurance accounting or in
reinsurance transactions. A master's degree from an accredited college or
university in accounting, insurance, or risk management can substitute for one
year of the required experience. Professional experience as described above can
substitute on a year-for-year basis for the required education.
c. An individual is in good standing with the
Society of Financial Examiners and is certified by that organization to be
eligible to hold the title of Certified Financial Examiner.
2. In selecting a person as a reinsurance
specialist the Office shall consider the individual's experience, knowledge,
skill, and abilities as they relate to the needs of the examination to be
performed. This consideration shall include the individual's experience with
the kind of insurance which is the subject of the examination; knowledge of
accounting principles, practices and procedures; ability to prepare financial
statements to reflect the reinsurance transactions; ability to provide
professional and technical assistance; understanding of risk transfer as
defined in the NAIC Examiners Handbook and the NAIC Accounting Practices and
Procedures and Annual Statement Instruction Manuals, as adopted in Rule
69O-137.001, F.A.C.; and the
ability to evaluate claims experience, both reported and incurred but not
reported, relevant to the type of insurance which is the subject of the
examination.
(c)
1. An investment specialist shall be
qualified to conduct an examination under this subsection if that contractor
can demonstrate competency by education and experience to perform such an
examination in that capacity. Competency by education and experience shall be
demonstrated if any one of the following is true:
a. An individual has a bachelor's degree from
an accredited college or university and four years of professional experience
in the capacity for which the contractor is to perform. A master's degree from
an accredited college or university in accounting, or finance can substitute
for one year of the required experience. Professional experience as described
above can substitute on a year-for-year basis for the required
education.
b. An individual is in
good standing with the Society of Financial Examiners and is certified by that
organization to be eligible to hold the title of Certified Financial
Examiner.
2. In selecting
a person as an investment specialist the Office shall consider the individual's
experience, knowledge, skill, and abilities as they relate to the needs of the
examination to be performed.
(d)
1. An
information technology specialist shall be qualified to conduct an examination
under this subsection if that contractor can demonstrate competency by
education and experience to perform such an examination in that capacity.
Competency by education and experience shall be demonstrated if the individual
has a bachelor's degree from an accredited college or university and four years
of professional experience in the capacity for which the contractor is to
perform. A master's degree from an accredited college or university in
information technology or a similar field can substitute for one year of the
required experience. Professional experience as described above can substitute
on a year-for-year basis for the required education.
2. In selecting a person as an information
technology specialist the Office shall consider the individual's experience,
knowledge, skill, and abilities as they relate to the needs of the examination
to be performed.
(e) The
firm selected by the office to perform the examination shall have no conflicts
of interest that might affect its ability to independently perform its
responsibilities on the examination.
(f) The rates charged to the insurer being
examined under the contract shall be consistent with rates charged by other
firms in a similar profession and shall be comparable with the rates charged
for comparable examinations. The rates and terms shall be set forth in the
contract.
(g) Contractors may
submit a curriculum vitae detailing their experience and qualifying credentials
to the Office, as well as a proposed hourly rate for services to be performed.
The acceptability of a contractor to the Office shall be determined based on
consideration of the firm's professional competence, objectivity, and that the
rates charged are consistent with rates charged by other firms in a similar
profession, as referenced in subsection (4), above, providing comparable
services, so as to protect the examined insurer from being overcharged for the
examination. Once a contractor has been accepted by the Office, they will be
placed on a list of eligible examination contractors.
(h) In selecting contractors to conduct a
specific examination, the Office shall consider the contractor's experience,
knowledge, skill, and abilities as they relate to the needs of the examination
to be performed. This consideration shall include the contractor's experience
with the kind of insurance which is the subject of the examination.
(i) After a contractor has been selected for
a specific examination the Office shall enter into a contract with the
contractor, detailing the scope of work for the engagement. The contract shall
include a provision that the contractor has no conflict of interest that might
affect its ability to independently perform its responsibilities. The
contractor shall submit all requests for payment to the Office in the manner
prescribed by the contract.
(j) All
requests for reimbursement of travel expenses are to be made on Form
DFS-C1-500,
http://www.flrules.org/Gateway/reference.asp?No=Ref-08299,
State of Florida Voucher For Reimbursement of Travel Expenses, (Rev. 12/13).
This form is incorporated by reference and adopted by this rule for this
purpose. It is available at
http://www.floir.com/sitedocuments/DFS-C1-500.xls.
(k) Upon receipt and review of the
contractor's request for payment, the Office will invoice the insurer being
examined and the insurer shall make payment to the Office pursuant to Sections
624.316(2)(e)3. and 624.320(1),
F.S.
(l) Upon receipt of the
payment from the insurer being examined, the Office will make payment to the
contractor in accordance with the rates and terms set out in the
contract.
(5) Section
624.316(2)(f),
F.S., requires the examination of a domestic insurer once each year for any
domestic insurer that has continuously held a Certificate of Authority for less
than 3 years. For purposes of an examination under this subsection, the 3 years
shall constitute the time period from the date the Certificate of Authority is
granted through the following 3 full calendar years in which the insurer has
been licensed. The examination must cover the preceding fiscal year or the time
period since the last examination.
Rulemaking Authority 624.308(1), 624.316(2) FS. Law
Implemented 624.307(1), 624.316, 624.3161, 624.320, 624.321(1), 624.424
FS.
New 6-9-93, Amended 11-23-94, 4-4-99, Formerly 4-138.005,
Amended 7-1-09, 7-30-17.
