2023 Colorado Revised Statutes › Title 10 - INSURANCE (§§ 10-1-101 — 10-23-110) › GENERAL PROVISIONS (§§ 10-1-101 — 10-1-312) › Article 1 - GENERAL PROVISIONS (§§ 10-1-101 — 10-1-312) › Part 3 - MARKET CONDUCT (§§ 10-1-301 — 10-1-312) › Section 10-1-305 - Market conduct examinations

(1)
The commissioner may conduct a market conduct examination of any company as often as the commissioner, in the commissioner's sole discretion, deems appropriate; except that the commissioner shall rely upon the state of domicile to conduct market conduct examinations of those eligible nonadmitted insurers regulated in accordance with article
5
of this title 10.
(2)
To the extent practicable, the commissioner shall coordinate a market conduct examination of a foreign company authorized under this title 10 to do business in this state with the insurance commissioner of the company's state of domicile.
(3)
(a)
Except when extraordinary circumstances indicating a risk to consumers requires immediate action, at least sixty days before starting a market conduct examination, the division shall notify the company that a market conduct examination will be performed.
(b)
The division shall use the standard data request or a successor or modified product that is substantially similar to the standard data request.
(c)
At the same time the notice is sent to the company, the division shall provide notice on the NAIC's examination tracking system or successor NAIC product that a market conduct examination has been scheduled.
(4)
(a)
Except when extraordinary circumstances indicating a risk to consumers requires immediate action, at least thirty days before starting the market conduct examination, the division shall offer, in writing, to conduct a preexamination conference with the company's examination coordinator and key personnel to discuss:
(I)
Early resolution and simplification of procedures;
(II)
Avoidance of the production of unnecessary or duplicative information; and
(III)
Facilitation of complete, accurate, just, speedy, and inexpensive disposition of the examination.
(b)
Except when extraordinary circumstances indicating a risk to consumers requires immediate action, at least thirty days before starting the market conduct examination, the division shall prepare and provide to the company subject to the examination a work plan consisting of the following:
(I)
The name and address of the company being examined;
(II)
The name and contact information of the market conduct surveillance personnel who will be conducting the examination;
(III)
The type of market conduct examination being conducted;
(IV)
The scope of the examination;
(V)
The date the examination is scheduled to begin;
(VI)
A time estimate for the duration of the examination; and
(VII)
An estimated cost for the examination.
(c)
If a market conduct examination is expanded beyond the scope provided to the company in the work plan, the division shall:
(I)
Provide written notice to the company explaining the extent of and reasons for the expansion; and
(II)
Provide the company with a revised work plan as soon as practicable.
(5)
Before concluding a market conduct examination, the division shall offer, in writing, to hold a predraft conference with the company subject to the examination at least thirty days before filing a draft report. If the company chooses to have a predraft conference, the division shall design and conduct the predraft conference in accordance with the examination report provisions of the Market Regulation Handbook to facilitate:
(a)
Resolution of outstanding issues;
(b)
Discussion of possible corrective actions;
(c)
Review of the examination report before it is filed in draft form; and
(d)
Complete, accurate, just, speedy, and inexpensive conclusion of the examination.
(6)
(a)
The division shall adhere to the following procedure or timeline, unless a mutual agreement is reached with the company to modify the procedure or timeline:
(I)
The division shall deliver the draft report to the company within sixty days after completion of the market conduct examination, which is the date when the division confirms in writing that the examination is completed.
(II)
The company may respond with written submissions or rebuttals challenging any issue contained in the draft report within thirty days after the date of the draft report. Any issue in the draft report that is not challenged by the company is deemed accepted by the company. The company's written submissions and rebuttals must be included in the market conduct surveillance personnel's work papers.
(III)
Unless a mutual agreement is reached to extend the deadline, within thirty days after the period allowed for the company's written submissions or rebuttals ends, the division shall provide to the company a final report. The division shall not include any issues in the final report that were not included in the draft report without providing the company an opportunity to supplement its submissions and rebuttals in order to respond to any new issue. The company must file any supplement to its submissions and rebuttals within fourteen days after the division issues the final report.
(IV)
Within thirty days after issuance of the final report, the company must accept the findings of the final report or request a written hearing.
(b)
If the company accepts the findings of the final report, the following procedures apply:
(I)
The commissioner shall issue an order adopting the final report as written or with specified modifications or corrections within thirty days after the company accepts the report.
(II)
(A)
The commissioner shall include with an order issued pursuant to subsection (6)(b)(I) of this section findings and conclusions resulting from the commissioner's consideration and review of the final report, relevant market conduct surveillance personnel work papers, and any written submissions or rebuttals.
(B)
An order issued pursuant to subsection (6)(b)(I) of this section is a final agency action and shall be served upon the company by certified mail together with a copy of the adopted final report. Within sixty days after issuance of the adopted final report, the company shall file affidavits executed by each of its directors stating under oath that the directors have received a copy of the final report and related orders.
(III)
Notwithstanding the requirements of section
10-1-127
, if the final agency order modifies or corrects the final report accepted by the company, the company may appeal the modified or corrected portions of the final agency order, including the penalty or all or part of any fine or civil penalty imposed in the order, to the district court pursuant to section
24-4-106
. In the absence of any modification or corrections to the final report accepted by the company, the company does not have a right to judicial review of the final agency action adopted by the commissioner except for the right to appeal the penalty or all or part of any fine or civil penalty imposed in the order to the district court pursuant to section
24-4-106
.
(c)
If the company requests a written hearing, the following procedures apply:
(I)
The company must request the written hearing in writing and must specify the issues in the final report that the company is challenging. The company is limited to challenging the issues that were previously challenged in the company's written submission and rebuttal or supplemental submission and rebuttal as provided pursuant to subsections (6)(a)(II) and (6)(a)(III) of this section.
(II)
The hearing shall be conducted by written arguments submitted to the commissioner.
(III)
Discovery is limited to the market conduct surveillance personnel's work papers that are relevant to the issues the company is challenging. The relevant market conduct surveillance personnel's work papers are deemed admitted and included in the record. No other forms of discovery, including depositions and interrogatories, are allowed, except upon the written agreement of the company and the division.
(IV)
Only the company and the division may submit written arguments.
(V)
The company must submit its written argument within thirty days after it requests the hearing.
(VI)
The division shall submit its written response within thirty days after the end of the period allowed for the company to submit its written argument.
(VII)
The commissioner shall issue a decision accompanied by findings and conclusions resulting from the commissioner's consideration and review of the written arguments, the final report, relevant market conduct surveillance personnel work papers, and any written submissions or rebuttals. The commissioner's order is a final agency action and shall be served upon the company by certified mail together with a copy of the final report. Unless the effective date of the final agency order is postponed pursuant to section
24-4-106 (5)
, within sixty days after issuance of the final agency order, the company shall file affidavits executed by each of its directors stating under oath that the directors have received a copy of the final report and related orders.
(VIII)
Any portion of the final report that is not or cannot be challenged by the company is incorporated into the decision of the commissioner.
(IX)
Notwithstanding the requirements of section
10-1-127
, the commissioner's decision is a final agency action appealable to the district court pursuant to section
24-4-106
.
(7)
Findings of fact and conclusions of law in the commissioner's final agency action are prima facie evidence in any legal or regulatory action.
(8)
(a)
The commissioner shall continue to hold the content of any final agency action of a market conduct examination as private and confidential for a period of forty-nine days after the final agency action. After the forty-nine-day period expires, the commissioner shall open the final agency action for public inspection if a court of competent jurisdiction has not stayed its publication.
(b)
Nothing in this part 3 prevents the commissioner from disclosing the content of an examination report, preliminary examination report, or results, or any matter relating to a report or results, to the division or to the insurance division of any other state or agency or office of the federal government at any time if the division, agency, or office receiving the report or related matters agrees and has the legal authority to hold it confidential in a manner consistent with this part 3.
Added by 2017 Ch. 284, § 10, eff. 1/1/2018.
L. 2017: Entire part added, (HB 17-1231), ch. 284, p. 1565, § 10, effective 1/1/2018.