38.2-1925 - Examination of rate service organizations and joint underwriting and joint reinsurance organizations.
§ 38.2-1925. Examination of rate service organizations and joint underwritingand joint reinsurance organizations.
A. Whenever the Commission considers it necessary to be informed about anymatter related to the enforcement of the insurance laws, it may examine theaffairs and condition of any rate service organization under subsection A of§ 38.2-1913 and of any joint underwriting or joint reinsurance organizationunder § 38.2-1915.
B. So far as reasonably necessary for any examination under subsection A ofthis section, the Commission may examine the accounts, records, documents orevidence of transactions, so far as they relate to the examinee, of any (i)officer, (ii) manager, (iii) general agent, (iv) employee, (v) person who hasexecutive authority over or is in charge of any segment of the examinee'saffairs, (vi) person controlling or having a contract under which he has theright to control the examinee whether exclusively or with others, (vii)person who is under the control of the examinee, or (viii) person who isunder the control of a person who controls or has a right to control theexaminee whether exclusively or with others.
C. On demand every examinee under subsection A of this section shall makeavailable to the Commission for examination any of its own accounts, records,documents or evidences of transactions and any of those of the persons listedin subsection B of this section.
D. The Commission may examine every licensed rate service organization atintervals established by the Commission.
E. 1. Instead of all or part of an examination under subsections A and B ofthis section, or in addition to it, the Commission may order an independentaudit by certified public accountants or actuarial evaluation by actuariesapproved by it of any person subject to the examination requirement. Anyaccountant or actuary selected shall be subject to standards respectingconflicts of interest used by the Commission. Any audit or evaluation underthis subsection shall be subject to subsections H through O of this section,so far as appropriate.
2. Instead of all or part of an examination under this section, theCommission may accept the report of an audit already made by certified publicaccountants or actuarial evaluation by actuaries approved by it, or thereport of an examination made by the insurance department of another state.
F. [Reserved.]
G. An examination may cover comprehensively all aspects of the examinee'saffairs and condition. The Commission shall determine the exact nature andscope of each examination, and in doing so shall take into account allrelevant factors, including but not limited to (i) the length of time theexaminee has been operating, (ii) the length of time it has been licensed inthis Commonwealth, (iii) the nature of the services provided, (iv) the natureof the accounting records available and (v) the nature of examinationsperformed elsewhere.
H. For each examination under this section, the Commission shall issue anorder stating the scope of the examination and designating the examiner incharge. On demand a copy of the order shall be exhibited to the examinee.
I. Any examiner authorized by the Commission shall, so far as necessary forthe purposes of the examination, have access at all reasonable hours to thepremises and to any books, records, files, securities, documents or propertyof the examinee and to those of persons under subsection B of this section sofar as they relate to the affairs of the examinee.
J. The officers, employees and agents of the examinee and of persons undersubsection B of this section shall comply with every reasonable request ofthe examiners for assistance in any matter relating to the examination. Noperson shall obstruct or interfere with the examination in any way other thanby legal process.
K. If the Commission finds the accounts or records to be inadequate forproper examination of the condition and affairs of the examinee or improperlykept or posted, it may employ experts to rewrite, post or balance them at theexpense of the examinee.
L. The examiner in charge of an examination shall make a proposed report ofthe examination that shall include the information and analysis as is orderedin subsection H of this section, together with the examiner'srecommendations. At the discretion of the examiner in charge, preparation ofthe proposed report may include conferences with the examinee or itsrepresentatives. The proposed report shall remain confidential until filedunder subsection M of this section.
M. The Commission shall serve a copy of the proposed report upon theexaminee. Within twenty days after service, the examinee may serve upon theCommission a written demand for a hearing on the contents of the report. If ahearing is demanded the Commission shall give notice and hold a hearing, andon demand by the examinee the hearing shall be informal and private. TheCommission shall adopt the report with any necessary modifications and fileit for public inspection, or it may order a new examination within either (i)sixty days after the hearing or (ii) if no hearing is demanded, sixty daysafter the last day on which the examinee might have demanded a hearing.
N. The Commission shall forward a copy of the examination report to theexaminee immediately upon adoption, except that if the proposed report isadopted without change, the Commission need only so notify the examinee.
O. The examinee shall furnish copies of the adopted report to each member ofits board of directors or other governing board.
P. The Commission may furnish, without cost or at a price to be determined byit, a copy of the adopted report to the insurance commissioner of anyjurisdiction in which the examinee is licensed and to any other interestedperson in this Commonwealth or elsewhere.
Q. In any proceeding by or against the examinee or any officer or agent ofthe examinee, the examination report as adopted by the Commission shall beadmissible as evidence of the facts stated in the examination report. In anyproceeding by or against the examinee the facts asserted in any reportproperly admitted in evidence shall be presumed to be true in the absence ofcontrary evidence.
R. The reasonable costs of an examination under this section shall be paid bythe examinee except as provided in subsection U of this section. The costsshall include the salary and expenses of each examiner and any other expensesdirectly apportioned to the examination.
S. The amount payable under subsection R of this section shall become due tendays after the examinee has been served a detailed account of the costs.
T. The Commission may require any examinee, before or during an examination,to deposit with the State Treasurer any deposits the Commission considersnecessary to pay the cost of the examination. Any deposit and any paymentmade under subsections R and S of this section shall be credited to thespecial fund of the Bureau of Insurance.
U. On the examinee's request or on its own motion, the Commission may pay allor part of the costs of an examination whenever it finds that, because of thefrequency of examinations or other factors, imposition of the costs wouldplace an unreasonable burden on the examinee. The Commission shall include inits annual report information about any instance in which it applied thissubsection.
V. Deposits and payments under subsections R through U of this section shallnot be considered to be a tax or license fee within the meaning of any law.If any other state charges a per diem fee for examination of examineesdomiciled in this Commonwealth, any examinee domiciled in that other stateshall pay the same fee when examined by the Commission.
(1973, c. 504, § 38.1-279.53; 1986, c. 562.)