"Domestic insurer" defined
Sec. 2. (a) As used in this chapter, "domestic insurer" means an insurer organized under the laws of Indiana.
(b) If a domestic insurer is a member of an "insurance holding company system" (as defined in IC 27-1-23-1), the term "domestic insurer" also includes:
(1) any person in immediate control of the domestic insurer; and
(2) any affiliate:
(A) in which the domestic insurer has invested; or
(B) that is indebted to the domestic insurer.
As added by P.L.244-1989, SEC.2.
"Independent auditor" defined
Sec. 3. As used in this chapter, "independent auditor" means a certified public accountant or a certified public accounting firm that conducts an annual audit of a domestic insurer as required by this chapter.
As added by P.L.244-1989, SEC.2.
"Significant deficiency" defined
Sec. 3.5. As used in this chapter, "significant deficiency" means a reportable condition described in the Professional Standards of the American Institute of Certified Public Accountants.
As added by P.L.251-1995, SEC.3.
"Work papers" defined
Sec. 4. (a) As used in this chapter, "work papers" means the records kept by the independent auditor of the procedures followed, the tests performed, the information obtained, and the conclusions reached by the independent auditor's audit of the financial statements of a domestic insurer.
(b) The term includes any audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents, and schedules or commentaries that:
(1) are prepared or obtained by the independent auditor in the course of any audit of the financial statements of a domestic
(2) support the independent auditor's opinion on the domestic insurer's financial statements.
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.4.
Application of chapter; exemptions
Sec. 5. (a) Except as provided in subsections (b) and (c), this chapter applies to all domestic insurers.
(b) A domestic insurer that has:
(1) direct written premiums of less than one million dollars ($1,000,000) in any calendar year; and
(2) less than one thousand (1,000) policyholders or certificate holders of directly written policies nationwide at the end of a calendar year;
is exempt from this chapter with respect to that year. However, the commissioner may require compliance with this chapter upon a finding that compliance with this chapter is necessary for the commissioner to carry out a statutory responsibility.
(c) A foreign or an alien insurer that files an audited financial report in another state or country pursuant to that state's or country's requirement for audited financial reports is exempt, with respect to the year of that audited financial report, from the requirement to file an audited financial report with the commissioner under this chapter, if:
(1) the commissioner has found the other state's or country's requirement for audited financial reports to be substantially similar to the requirements of this chapter;
(2) copies of the audited financial report, the report on significant deficiencies in internal controls, and the accountant's letter of qualifications filed with the other state or country are filed with the commissioner in accordance with the filing dates set forth in sections 8, 12, and 12.5 of this chapter; and
(3) a copy of a notification of an adverse financial condition report that is filed with the other state is filed with the commissioner within the time specified in section 11 of this chapter.
This subsection does not prevent the commissioner from ordering, conducting, or performing examinations of foreign or alien insurers under the rules, regulations, and practices of the department.
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.5.
Annual audit; filing; time; extension
Sec. 6. (a) A domestic insurer shall have an audit by an independent auditor every year and shall file an audited financial report with the commissioner every year before June 1 immediately following the December 31 that ends the year reported on in the
financial report. The commissioner may require a domestic insurer
to file an audited financial report earlier than June 1 if the
commissioner gives the domestic insurer ninety (90) days advance
notice of the earlier filing date.
(b) An extension of the June 1 filing date may be granted by the commissioner for thirty (30) days upon a showing by the insurer and its independent auditor of the reasons for requesting the extension and a determination by the commissioner that there is good cause for an extension. The request for an extension must be submitted in writing at least ten (10) days before the due date, and must include sufficient detail to permit the commissioner to make an informed decision with respect to the requested extension.
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.6.
Filing annual audited financial reports by domestic insurer
Sec. 6.5. Except as provided in this chapter, a domestic insurer shall file the annual audited financial reports required under this chapter for the calendar year ending December 31, 1989, and for every calendar year after 1989.
As added by P.L.220-2011, SEC.420.
Contents of report
Sec. 7. (a) The annual audited financial report filed by a domestic insurer under this chapter shall report:
(1) the financial position of the domestic insurer as of the end of the most recently ended calendar year; and
(2) the results of the domestic insurer's operations, cash flow, and changes in capital and surplus for that year;
in conformity with statutory accounting practices prescribed, or otherwise permitted, by the department of insurance.
(b) The financial statements included in the annual audited financial report filed by a domestic insurer under this chapter shall be examined by an independent auditor. The independent auditor shall conduct its examination of the domestic insurer's financial statements in accordance with generally accepted auditing standards, and shall consider such other procedures illustrated in the Financial Condition Examiner's Handbook published by the National Association of Insurance Commissioners as the independent auditor considers necessary.
(c) An annual audited financial report filed by a domestic insurer under this chapter must include the following:
(1) The report of the insurer's independent auditor.
(2) A balance sheet reporting admitted assets, liabilities, capital, and surplus.
(3) A statement of operations.
(4) A statement of cash flow.
(5) A statement of changes in capital and surplus.
Sec. 8. (a) A domestic insurer that is required by this chapter to file annual audited financial reports shall, not more than sixty (60) days after becoming subject to the requirement, register in writing with the commissioner the name and address of the independent auditor retained by the insurer to conduct the annual audits required by this chapter. The domestic insurer shall continuously ensure that the information provided to the commissioner under this section is accurate, and shall inform the commissioner in writing of any change in the identity or address of its independent auditor.
(b) A domestic insurer shall obtain a letter from its independent auditor that:
(1) states that the independent auditor is aware of the provisions of IC 27 and the administrative rules of the department of insurance that relate to auditing, accounting, and financial matters; and
(2) affirms that the independent auditor will express its opinion on the financial statements of the domestic insurer in the terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by the department, specifying such exceptions as the independent auditor may believe appropriate.
The domestic insurer shall file a copy of this letter with the
(c) If an independent auditor that audited the most recent financial report filed by the insurer with the commissioner under this chapter subsequently ceases to be the independent auditor for the insurer, the insurer shall:
(1) not more than five (5) business days after the cessation of the independent auditor's services, notify the commissioner in writing of the identity and address of the new independent auditor;
(2) not more than ten (10) business days after the notification given in subdivision (1), furnish the commissioner with a separate letter that states whether in the twenty-four (24) months preceding the engagement of the new independent auditor there were any disagreements between the insurer and its former independent auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of the former independent auditor, would have caused the former independent auditor to make reference to the subject matter of the disagreement in the former independent auditor's statement of its opinion on the insurer's financial report, and, if there was such a disagreement, provides a description of the disagreement. Disagreements required to be reported under this subdivision include those at the decision making level that were resolved:
(A) to the former accountant's satisfaction; and
(B) not to the former accountant's satisfaction; and
(3) comply with subsection (d).
For the purposes of this subsection, "decision making level" refers to the personnel of the insurer who are responsible for the presentation of the insurer's financial statements and the personnel of the independent auditor who are responsible for rendering the opinion of the auditor on the insurer's financial report.
(d) A domestic insurer subject to the provisions of subsection (c) shall:
(1) provide its former independent auditor with a copy of the letter furnished to the commissioner under subsection (c)(2); and
(2) request in writing its former independent auditor to furnish a letter addressed to the insurer stating whether the former independent auditor agrees with the statements contained in the letter furnished to the commissioner under subsection (c)(2) and, if not, stating the reasons for the former independent auditor's disagreement.
The domestic insurer shall furnish the commissioner with a copy of any responsive letter it receives from its former independent auditor within five (5) business days after the insurer receives the letter.
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.8.
auditor with another that is sufficiently independent of the insurer.
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.9; P.L.11-2011, SEC.6.
Sec. 10. A domestic insurer may apply in writing to the commissioner for approval to satisfy the requirements of this chapter by filing audited consolidated or combined financial statements instead of separate annual audited financial statements if the insurer is part of a group of insurance companies that utilizes a pooling or one hundred percent (100%) reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer cedes all of the insurer's direct and assumed business to the pool. If a domestic insurer whose application is approved elects to file a consolidated return, the insurer shall file, with its financial statements, a columnar consolidating or combining schedule, which must meet the following requirements:
(1) Amounts shown on the consolidated or combined audited financial report shall be shown on the schedule.
(2) Amounts for each insurer subject to this section shall be stated separately.
(3) Noninsurance operations shall be shown on the schedule on an individual basis.
(4) Explanations of consolidating and eliminating entries shall be included.
(5) A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the schedule and comparable amounts shown on the annual statements of the insurers.
As added by P.L.244-1989, SEC.2. Amended by P.L.130-1994, SEC.13; P.L.116-1994, SEC.17.
Report from independent auditor of financial condition irregularities; subsequent facts
Sec. 11. (a) A domestic insurer required to file annual audited financial reports under this chapter shall require its independent auditor to report in writing to the board of directors or the board of director's audit committee, not more than five (5) business days after making a determination, the independent auditor's determination that:
(1) the domestic insurer has materially misstated to the commissioner the financial condition of the insurer as of the date of the balance sheet being examined by the independent auditor; or
(2) the domestic insurer does not meet the minimum capital and surplus requirements of Indiana as of the date of the balance sheet being examined by the independent auditor.
The domestic insurer who has received a report under this section shall forward a copy of the report to the commissioner within five (5)
business days after receipt of the report and shall provide the
independent accountant making the report with evidence of the report
being furnished to the commissioner. An independent auditor who
does not receive the evidence that the report was filed with the
commissioner within the required five (5) business days shall furnish
the commissioner a copy of the report within the next five (5)
business days. An independent auditor may not be liable to any
person for a statement made in connection with this subsection, if the
statement is made in good faith compliance with this subsection.
(b) If the independent auditor of a domestic insurer, after the filing of the insurer's audited financial report under this chapter, becomes aware of facts that, if the independent auditor had been aware of the facts when writing its report, might have affected the independent auditor's report that was included in the insurer's audited financial report, the independent auditor shall take such action as is prescribed in the Professional Standards of the American Institute of Certified Public Accountants.
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.10.
Report describing deficiencies in internal control structure
Sec. 12. (a) A domestic insurer required by this chapter to file an audited financial report with the commissioner shall also furnish the commissioner with:
(1) a written report (or a letter on reportable conditions) describing the significant deficiencies in the insurer's internal control structure, if internal control deficiencies were noted by the domestic insurer's independent auditor in connection with its audit; and
(2) a written discussion of any remedial action taken or proposed in connection with the written report.
(b) The written report and written discussion required under subsection (a) must be filed not later than sixty (60) days after the filing of the annual audited financial statements.
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.11.
Letter from independent auditor; contents
Sec. 12.5. The independent auditor shall furnish the domestic insurer, in connection with and for inclusion in the filing of the annual audited financial report, a letter stating the following:
(1) That the independent auditor is independent with respect to the insurer and conforms to the standards of the independent auditor's profession as contained in the Code of Professional Ethics and Pronouncements of the American Institute of Certified Public Accountants and the rules of Professional Conduct of the Indiana State Board of Accountancy.
Independent audit work papers and communications; review by department examiners
Sec. 13. (a) A domestic insurer required to file an audited financial report under this chapter shall require its independent auditor to make available for review by department examiners:
(1) all work papers prepared in the conduct of the independent auditor's examination; and
(2) any record of significant communications related to the audit between the independent auditor and the insurer that took place at:
(A) the offices of the insurer;
(B) the department;
(C) the offices of the independent auditor; or
(D) any other reasonable place designated by the commissioner.
The insurer shall require the independent auditor to retain the audit work papers and communications until the department has filed a report on the examination covering the period of the audit but not later than seven (7) years after the date of the audit report.
(b) Department examiners, in conducting a review of an independent auditor's work papers, may make and retain copies of the work papers and communications. A review of an independent auditor's work papers and communications shall be considered an
investigation and all work papers and communications obtained or
copied during the course of that investigation are confidential under
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.13.
Exemption application; hearing
Sec. 14. (a) In response to a written application from a domestic insurer, the commissioner may grant an exemption from compliance with this chapter if the commissioner finds, upon review of the application, that compliance with this chapter would constitute a financial or an organizational hardship upon the domestic insurer. An exemption may be granted at any time for a specified period.
(b) Within ten (10) days after the denial of a domestic insurer's written request for an exemption from this chapter, the insurer may, in writing, request a hearing on its application for an exemption. The hearing shall be held under IC 4-21.5.
As added by P.L.244-1989, SEC.2. Amended by P.L.251-1995, SEC.14.
(Repealed by P.L.251-1995, SEC.22.)
Penalty for noncompliance
Sec. 16. A domestic insurer that fails to file an audited annual financial report before July 1 or any other deadline established by the commissioner for the insurer under this chapter without having obtained an extension is subject to a civil penalty of fifty dollars ($50) per day until the report is received by the commissioner.
As added by P.L.244-1989, SEC.2.
Effect of chapter on examinations under IC 27-1-3.1
Sec. 17. This chapter does not prohibit or in any way restrict the commissioner from ordering, conducting, or performing examinations of insurers under IC 27-1-3.1.
As added by P.L.244-1989, SEC.2. Amended by P.L.26-1991, SEC.6.
British or Canadian insurers
Sec. 18. (a) In the case of a British or Canadian insurer, the annual audited financial report refers to the annual statement of total business on the form filed by the company with its domiciliary supervision authority audited by an independent auditor.
(b) For a British or Canadian insurer, the letter required under section 8 of this chapter shall state that the accountant is aware of the requirement relating to the annual audited statement filed with the
commissioner under section 6 of this chapter and shall affirm that the
opinion expressed is in conformity with those requirements.
As added by P.L.251-1995, SEC.15.