Utah Administrative Code
Topic - Insurance
Title R590 - Administration
Rule R590-254 - Annual Financial Reporting Rule
Section R590-254-14 - Requirements for Audit Committees
Current through Bulletin 2024-06, March 15, 2024
(1) This section does not apply to foreign or alien insurers licensed in this state or an insurer that is a SOX compliant entity or a direct or indirect wholly-owned subsidiary of a SOX compliant entity.
(2) The audit committee shall be directly responsible for the appointment, compensation, and oversight of the work of any accountant, including resolution of disagreements between management and the accountant regarding financial reporting, for the purpose of preparing or issuing the audited financial report or related work pursuant to this rule. Each accountant shall report directly to the audit committee.
(3) Each member of the audit committee shall be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to Subsection (6) and Subsection R590-254-3(3).
(4) To be considered independent for purposes of this section, a member of the audit committee:
(5) If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, that person, with notice by the responsible entity to the state, may remain an audit committee member of the responsible entity until the earlier of the next annual meeting of the responsible entity or one year from the occurrence of the event that caused the member to be no longer independent.
(6) To exercise the election of the controlling person to designate the audit committee for purposes of this rule, the ultimate controlling person shall provide written notice to the commissioners of the affected insurers.
(7)
(8) The proportion of independent audit committee members shall meet or exceed the following criteria:
Table |
|
$0 - $300,000,000 |
No minimum requirements. See also Notes A and B. |
Over $300,000,000 -$500,000,000 |
Majority (50% or more) of members shall be independent. See also Notes A and B. |
Over $500,000,000 |
Super majority of members (75% or more) shall be independent. See also Note A. |
Note A: The commissioner has authority afforded by state law to require the entity's board to enact improvements to the independence of the audit committee membership if the insurer is in an RBC action level event, meets one or more of the standards of an insurer deemed to be in hazardous financial condition, or otherwise exhibits qualities of a troubled insurer. Note B: All insurers with less than $500,000,000 in prior year direct written and assumed premiums are encouraged to structure their audit committees with at least a supermajority of independent audit committee members. Note C: Prior calendar year direct written and assumed premiums shall be the combined total of direct premiums and assumed premiums from non-affiliates for the reporting entities. |
(9)