Title 27
Insurance

Chapter 13.1
Examinations

§ 27-13.1-5. Examination reports.

(a) General description. An examination report shall be comprised of only facts appearing upon the books, records, or other documents of the company, its agents or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs, and such conclusions and recommendations as the examiners find reasonably warranted from the facts.

(b) Filing of examination report. No later than sixty (60) days following completion of the examination, the examiner in charge shall file with the department a verified written report of examination under oath. Upon receipt of the verified report, the department shall transmit the report to the company examined, together with a notice that shall require that the company examined file with the director a written response to all comments and recommendations contained in the examination report within thirty (30) days. The response shall include a written plan of how and when the comments and recommendations contained in the examination report will be corrected and/or implemented. For each comment and recommendation, the response must include an implementation date and a completion date for each corrective action. In lieu of these requirements, the company may submit a rebuttal to any comment or recommendation contained in the examination report.

(c) Adoption of report on examination. Within thirty (30) days of the end of the period allowed for the receipt of written responses or rebuttals, the director shall fully consider and review the report, together with any written responses or rebuttals and any relevant portions of the examiner’s workpapers and enter an order:

(1) 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 director, the director may order the company to take any action the director considers necessary and appropriate to cure the violation; or

(2) Rejecting the examination report with directions to the examiners to reopen the examination for the purposes of obtaining additional data, documentation, or information, and refiling pursuant to this section; and

(3) Calling for an investigatory hearing with no less than twenty (20) days notice to the company for the purposes of obtaining additional documentation, data, information, and testimony.

(d) Orders and procedures.

(1) All orders entered pursuant to this section shall be accompanied by findings and conclusions resulting from the director’s consideration and review of the examination report, relevant examiner workpapers, and any written responses or rebuttals. Any order shall be considered a final administrative decision and may be appealed pursuant to the Administrative Procedures Act, chapter 35 of title 42, and shall be served upon the company by certified mail, together with a copy of the adopted examination report. Within thirty (30) days of the issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.

(2)(i) Any hearing conducted under this section by the director 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 upon the face of the filed examination report or raised by or as a result of the director’s review of relevant workpapers or by the written response or rebuttal of the company. Within twenty (20) days of the conclusion of any hearing, the director shall enter an order pursuant to this section.

(ii) The director 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 that tend to substantiate any assertions set forth in any written response or rebuttal. The director or his or her 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 director or his or her representative shall be under oath and preserved for the record.

(iii) Nothing contained in this section shall require the department to disclose any information or records that would indicate or show the existence or content of any investigation or activity of a criminal justice agency.

(iv) The hearing shall proceed with the director or his or her representative posing questions to the persons subpoenaed. Thereafter, the company and the department may present testimony relevant to the investigation. Cross-examination shall be conducted only by the director or his or her representatives. The company and the department shall be permitted to make closing statements and may be represented by counsel of their choice.

(e) Publication and use.

(1) Upon the adoption of the examination report under this section, the director shall continue to hold the content of the examination report as private and confidential information for a period of thirty (30) days, except to the extent provided in subsection (b). After this, the commissioner may open the report for public inspection so long as no court of competent jurisdiction has stayed its publication;

(2) Nothing contained in this title 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 thereto, to the insurance department of this or any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time, so long as the agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this chapter;

(3) In the event the director determines that regulatory action is appropriate as a result of any examination, he or she may initiate any proceedings or actions as provided by law.

(f) Privilege for, and confidentiality of ancillary information.

(1)(i) Except as provided in subsection (e) above and in this subsection, documents, materials, or other information, including, but not limited to, all working papers, and copies thereof, created, produced by, obtained by, or disclosed to the director or any other person in the course of an examination made under this chapter, or in the course of analysis by the director of the financial condition or market conduct of a company shall be confidential by law and privileged, shall not be subject to the Access to Public Records Act, chapter 2 of title 38, shall not be subject to subpoena, and shall not be subject to discovery or be admissible in evidence in any private civil action. The director is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as part of the director’s official duties.

(ii) Documents, materials or other information, including, but not limited to, all working papers, and copies thereof, in the possession or control of the National Association of Insurance Commissioners and its affiliates and subsidiaries shall be confidential by law and privileged, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action if they are:

(A) Created, produced or obtained by or disclosed to the National Association of Insurance Commissioners and its affiliates and subsidiaries in the course of the National Association of Insurance Commissioners and its affiliates and subsidiaries assisting an examination made under this chapter, or assisting a director in the analysis of the financial condition or market conduct of a company; or

(B) Disclosed to the National Association of Insurance Commissioners and its affiliates and subsidiaries under subdivision (3) of this subsection by a director or commissioner.

(iii) For the purposes of paragraph (f)(1)(i), “act” includes the law of another state or jurisdiction that is substantially similar to this act.

(2) Neither the director nor any person who received the documents, material or other information while acting under the authority of the director, including the National Association of Insurance Commissioners and its affiliates and subsidiaries, shall be permitted to testify in any private civil action concerning any confidential documents, materials or information subject to subdivision (f)(1).

(3) In order to assist in the performance of the director’s duties, the director:

(i) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to subdivision (f)(1), with other state, federal and international regulatory agencies, with the National Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication or other information;

(ii) May receive documents, materials, communications or information, including otherwise confidential and privileged documents, materials or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and

(iii) May enter into agreements governing sharing and use of information consistent with this subsection.

(4) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the director under this section or as a result of sharing as authorized in subdivision (f)(3).

(5) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this subsection shall be available and enforced in any proceeding in, and in any court of, this state.

(6) In this subsection, the terms “department,” “insurance department,” “law enforcement agency,” “regulatory agency,” and the “National Association of Insurance Commissioners” include, but are not limited to, their employees, agents, consultants and contractors.