Current through February 26, 2024
(1) PURPOSE. This
rule is intended to implement and interpret s.
601.41,
Stats., for the purpose of setting minimum standards and techniques for
accounting and reporting of data relating to company financial transactions and
other operations.
(2) SCOPE. This
rule shall apply to all town mutual insurers organized or operating under ch.
612, Stats.
(3) ACCOUNTING RECORDS.
The following journals, ledgers and subsidiary records or similar records from
which the data indicated may be obtained shall be maintained:
(a) Policy Register: A register or other
records which shall contain the policy number, policyholder's name, effective
date of policy, term of policy, risk in force, amount of risk in force
reinsured, premium amount, policy fee, reinsurance premium, and provision for
miscellaneous data.
(b) Cash
Receipts Journal: A journal which shall contain the date, payor, amount
received, identification, and reference to the general ledger account and
amount affected. All cash received by the company shall be recorded in the
journal.
(c) Cash Disbursements
Journal: A journal which shall contain the date, payee, check number, amount of
check, and a reference to the general ledger account and amount affected. All
cash disbursed by the company shall be recorded in the journal.
(d) General Journal: A journal for recording
entries for all transactions affecting ledger items, which are not recorded in
the cash receipts journal or cash disbursements journal. The general journal
shall contain the date of the transaction, an explanation, the ledger account
affected, and the amount of the transaction.
(e) General Ledger: A ledger which shall have
an account for each asset and liability, surplus, income and expense items of
the company. Each account shall contain an account title and/or number, a date
for each transaction, a description, debit amounts, credit amounts and an
account balance.
(f) Loss Claim
Register: A register for recording all claims filed with the company. It shall
list all claims in claim number order and contain the claimant's and
policyholder's name, policy number, date of loss, date that loss was reported
to the company, cause of the loss, estimated amount of the loss, and the date
the claim was settled and the amount of loss payments, if any. Claims closed
without payment should be so noted.
(4) ACCOUNTING CONTROLS. The following
minimum controls of records and data handling should be maintained:
(a) Cash Receipts: All cash receipts shall be
recorded on a cash receipts journal. The cash receipts and cash funds of the
company shall at all times be kept separate and distinct from any personal,
agency or other funds. All cash received shall be deposited in the bank intact,
in the company's name. A duplicate deposit ticket shall be retained in the
company's office for each deposit. All checks in payment of premiums or
received by the company for other purposes shall be endorsed for deposit
immediately upon receipt. All cash receipts shall be deposited at least weekly.
All cash deposits shall be prepared and made, whenever possible, by some
individual other than the one who records the receipts or reconciles the bank
accounts.
(b) Cash Disbursements:
All disbursements except those made from the petty cash fund shall be made by
check. All checks issued by the company shall be recorded in chronological and
numerical order in a cash disbursements journal. Each disbursement shall be
supported and explained in the records of the company. All checks used for
disbursements shall be pre-numbered and properly accounted for. All checks
shall be mailed or delivered immediately after being signed. All disbursements
over a specified amount shall be approved by more than one officer, director or
employee of the company. Whenever possible, a person other than the person
maintaining the company's cash disbursement journal or reconciling the bank
accounts shall sign the checks.
(c)
Petty Cash Fund: A petty cash fund may be maintained for the payment of small
bills or for making change. Each disbursement shall be supported by a signed
voucher or receipted invoice. At any time the total of the cash, checks and
paid vouchers in the fund shall exactly equal the total of the fund as
originally set up. The petty cash fund shall be reimbursed at regular intervals
and always on the last business day of each year.
(d) Reconciliation of Bank Accounts: Bank
statements shall be obtained from each of the banks in which the company
maintains checking accounts at the end of each calendar month. The balance
appearing on the bank statement shall be reconciled with the cash balance
appearing on the company's records at the end of each month. Whenever possible,
bank reconciliations should be made or reviewed by an individual other than the
individuals preparing and making bank deposits, recording income and
disbursements, and individuals signing company checks.
(e) Loss Claims: All claims reported to the
company shall be assigned a claim number when reported. Claims in excess of a
specified amount shall be approved by more than one officer, director or
employee of the company. All claims shall be adequately documented so that
amounts for settlement and coverage can be verified. The claim file shall
contain the reason for denial if the claim is denied.
(f) General Internal Controls: Non-negotiable
evidences of company investments such as registered bonds, certificates of
deposits, notes, etc., shall be maintained to ensure their safekeeping with
adequate safety controls. Negotiable evidences of company investments shall be
maintained in a safety deposit box in a bank, or under a safekeeping agreement
with a bank or banking and trust company pursuant to s.
610.23,
Stats. Access to a company safety deposit box containing negotiable securities
shall require the presence and signature of at least 2 officers, directors or
employees of the company. Company accounting records shall be maintained in
such detail that verification can be made to source documents supporting each
transaction.
(5)
FINANCIAL STATEMENTS. Financial statements shall be prepared by the secretary
and treasurer of the company showing the financial condition of the company as
of December 31, of each year or whenever requested by the commissioner. The
report shall be prepared as prescribed by the commissioner.
(6) FIDELITY BOND REQUIREMENTS. All insurers
subject to this rule shall procure and maintain in force a fidelity bond or
honesty insurance as a guaranty against financial loss caused by employee
dishonesty. The bond shall cover all fraudulent or dishonest acts, including
larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction
or willful application, committed by employees acting alone or in collusion.
The bond shall cover all officers, directors and employees having direct access
to the company's assets and with responsibility for the handling and processing
of income of the company and disbursements of the company. A blanket bond
covering all officers, directors and employees satisfies this requirement. The
minimum amount of the bond shall be determined on the basis of total admitted
assets, plus gross income of the company as set forth in the following
schedule:
|
Total Admitted Assets Plus Gross
Income
|
Minimum Amount of Bond
|
|
$ 0 - $ 500,000
|
$ 20,000
|
|
500,001 - 1,000,000
|
35,000
|
|
1,000,001 - 1,500,000
|
50,000
|
|
1,500,001 - 2,000,000
|
65,000
|
|
2,000,001 - 2,500,000
|
80,000
|
|
2,500,001 - 3,000,000
|
95,000
|
|
3,000,001 - 3,500,000
|
110,000
|
|
3,500,001 - 4,000,000
|
125,000
|
|
4,000,001 - 4,500,000
|
140,000
|
|
4,500,001 - 5,000,000
|
155,000
|
|
5,000,001 - 5,500,000
|
170,000
|
|
5,500,001 - 6,000,000
|
185,000
|
|
6,000,001 - 6,500,000
|
200,000
|
|
6,500,001 - 7,000,000
|
215,000
|
|
7,000,001 - 7,500,000
|
230,000
|
|
7,500,001 - 8,000,000
|
245,000
|
|
8,000,001 - 8,500,000
|
260,000
|
|
8,500,001 - 9,000,000
|
275,000
|
|
9,000,001 - 9,500,000
|
290,000
|
|
9,500,001 - 10,000,000
|
305,000
|
