Sec. 38a-91hh. Examinations of captive insurance companies. Costs. Confidentiality of financial examination workpapers and reports.
Sec. 38a-91hh. Examinations of captive insurance companies. Costs. Confidentiality of financial examination workpapers and reports. (a) At least once every
five years, and additionally whenever the Insurance Commissioner determines it to
be prudent, the commissioner or the commissioner's designee shall visit each captive
insurance company and thoroughly inspect and examine its affairs to ascertain its financial condition, its ability to fulfill its obligations and whether it has complied with the
provisions of sections 38a-91aa to 38a-91qq, inclusive, and any applicable provisions
of this title.
(b) In scheduling and determining the nature, scope and frequency of such examinations, the commissioner shall consider such matters as the results of financial statement
analyses and ratios, changes in management or ownership, actuarial opinions, reports
of independent certified public accountants, and such other criteria as set forth in the
examiners' handbook adopted by the National Association of Insurance Commissioners
and in effect at the time the commissioner exercises discretion under this section.
(c) (1) To carry out examinations under this section, the commissioner may appoint
as examiners one or more competent persons, not officers of or connected with or interested in any insurance company, other than as a policyholder. The commissioner may
engage the services of attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists to assist in conducting
the examinations under this section as examiners, the cost of which shall be borne by
the company which is the subject of the examination. Notwithstanding the provisions
of this subdivision, no domestic captive insurance company subject to examination
under this section shall pay, as costs associated with the examination, the salaries, fringe
benefits, traveling and maintenance expenses of examining personnel of the Insurance
Department engaged in such examination if such domestic company is otherwise liable
to assessment levied under section 38a-47, except that such company shall pay the
traveling and maintenance expenses of examining personnel of the department when
such company is examined outside the state.
(2) In conducting the examination, the commissioner, the commissioner's actuary
or any examiner authorized by the commissioner may examine, under oath, the officers
and agents of such a company and all persons deemed to have material information
regarding the company's property or business. Each such company, its officers and
agents shall produce the books and papers, in its or their possession, relating to its
business or affairs, and any other person may be required to produce any book or paper,
in his custody, deemed to be relevant to such examination for the inspection of the
commissioner, the commissioner's actuary or examiners, when required. The officers
and agents of the company shall facilitate the examination and aid the examiners in
making the same so far as it is in their power to do so. The refusal of any company by
its officers, directors, employees or agents to submit to examination or to comply with
any reasonable written request of the examiners shall be grounds for suspension of, or
refusal of or nonrenewal of any license or authority held by the company to engage in
an insurance or other business subject to the commissioner's jurisdiction. Any such
proceedings for suspension, revocation or refusal of any license or authority shall be
conducted pursuant to section 38a-91ii.
(3) In conducting the examination, the examiner shall observe those guidelines and
procedures set forth in the examiners' handbook adopted by the National Association
of Insurance Commissioners. The commissioner may also adopt such other guidelines
or procedures as the commissioner may deem appropriate.
(d) (1) Nothing contained in this section shall be construed to limit the commissioner's authority to terminate or suspend any examination in order to pursue legal or regulatory action pursuant to the insurance laws of this state. Findings of fact and conclusions
made pursuant to any examination shall be prima facie evidence in any legal or regulatory
action.
(2) Nothing contained in this section shall be construed to limit the commissioner's
authority in such legal or regulatory action to use and, if appropriate, to make public
any final or preliminary examination report, any examiner or company workpapers or
other documents, or any other information discovered or developed during the course
of any examination.
(3) Not later than sixty days after completion of the examination, the examiner in
charge shall file, under oath, with the Insurance Department a verified written report of
examination. Upon receipt of the verified report, the Insurance Department shall transmit the report to the company examined, together with a notice which shall afford the
company examined a reasonable opportunity, not to exceed thirty days, to make a written
submission or rebuttal with respect to any matters contained in the examination report.
Not later than thirty days after the period allowed for the receipt of written submissions
or rebuttals, the commissioner shall fully consider and review the report, together with
any written submissions or rebuttals and any relevant portions of the examiner's workpapers and enter an order: (A) Adopting the examination report as filed or with modification or corrections. If the examination report reveals that the company is operating in
violation of any law, regulation or prior order of the commissioner, the commissioner
may order the company to take any action the commissioner considers necessary and
appropriate to cure such violation; or (B) rejecting the examination report with directions
to the examiners to reopen the examination for purposes of obtaining additional data,
documentation or information, and refiling pursuant to subparagraph (A) of this subdivision; or (C) calling for an investigatory hearing with no less than twenty days notice to
the company for purposes of obtaining additional documentation, data, information and
testimony.
(e) (1) All orders entered pursuant to subdivision (3) of subsection (d) of this section
shall be accompanied by findings and conclusions resulting from the commissioner's
consideration and review of the examination report, relevant examiner workpapers and
any written submissions or rebuttals. The findings and conclusions, which form the
basis of any such order of the commissioner, shall be subject to review as provided in
section 38a-19.
(2) Any investigatory hearing conducted under subparagraph (C) of subdivision (3)
of subsection (d) of this section by the commissioner or authorized representative shall
be conducted as a nonadversarial confidential investigatory proceeding as necessary for
the resolution of any inconsistencies, discrepancies or disputed issues apparent (A) upon
the filed examination report, (B) raised by or as a result of the commissioner's review
of relevant workpapers, or (C) by the written submission or rebuttal of the company.
Not later than twenty days after conclusions of any such hearing, the commissioner shall
enter an order pursuant to subparagraph (A) of subdivision (3) of subsection (d) of this
section. The commissioner shall not appoint an examiner as an authorized representative
to conduct the hearing. The hearing shall proceed expeditiously with discovery by the
company limited to the examiner's workpapers which tend to substantiate any assertions
set forth in any written submission or rebuttal. The commissioner or the commissioner's
authorized representative may issue subpoenas for the attendance of any witnesses or
the production of any documents deemed relevant to the investigation whether under
the control of the department, the company or other persons. The documents produced
shall be included in the record and testimony taken by the commissioner or the commissioner's authorized representative shall be under oath and preserved for the record.
Nothing contained in this section shall require the department to disclose any information or records which would indicate or show the existence or content of any investigation
or activity of a criminal justice agency. The hearing shall proceed with the commissioner
or the commissioner's authorized representative posing questions to the persons subpoenaed. Thereafter the company and the Insurance Department may present testimony
relevant to the investigation. Cross-examination shall be conducted only by the commissioner or the commissioner's authorized representative. The company and the Insurance
Department shall be permitted to make closing statements and may be represented by
counsel of their choice.
(f) The commissioner may, if the commissioner deems it in the public interest,
publish any such report or the result of any such examination contained in such report
in one or more newspapers of the state.
(g) Nothing contained in this section shall prevent or be construed as prohibiting
the commissioner from disclosing the content of an examination report, preliminary
examination report or results, or any matter relating to such report to (1) the Insurance
Department of this or any other state or country, (2) law enforcement officials of this
or any other state, or (3) any agency of the federal government at any time, unless such
agency or office receiving the report or matters relating to such report agrees, in writing,
that such documents shall be confidential.
(h) All working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the commissioner or any other person in the course
of an examination made under this section shall (1) be confidential, (2) not be subject
to subpoena, and (3) not be made public by the commissioner or any other person, except
to the extent provided in subsection (g) of this section. Access to such information may be
granted by the commissioner to the National Association of Insurance Commissioners,
unless it agrees, in writing, that such information shall be confidential.
(i) (1) The commissioner may engage the services of, from time to time, on an
individual basis, qualified actuaries, certified public accountants or other similar individuals who are independently practicing their professions, even though said persons
may, from time to time, be similarly employed or retained by persons subject to examination under this section.
(2) No cause of action shall arise nor shall any liability be imposed against the
commissioner, the commissioner's authorized representatives or any examiner appointed by the commissioner for any statements made or conduct performed in good
faith while carrying out the provisions of this section.
(3) No cause of action shall arise, nor shall any liability be imposed, against any
person for the act of communicating or delivering information or data to the commissioner or the commissioner's authorized representative examiner pursuant to an examination made under this section, if such act of communication or delivery was performed
in good faith and without fraudulent intent or the intent to deceive.
(4) This section does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in subdivision
(2) of this subsection.
(5) A person identified in subdivision (2) of this subsection shall be entitled to an
award of attorney's fees and costs if he is the prevailing party in a civil cause of action
for libel, slander or any other relevant tort arising out of activities in carrying out the
provisions of this section and the party bringing the action was not substantially justified
in doing so. For purposes of this section, a proceeding is "substantially justified" if it
had a reasonable basis in law or fact at the time that it was initiated.
(P.A. 08-127, S. 8.)
History: P.A. 08-127 effective January 1, 2009.