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2023 West Virginia Code › Chapter 33. Insurance › Article 31A. Sponsored Captive Insurance Company Formation › §33-31A-7. Authorized Participants

Associations, corporations, limited liability companies, partnerships, trusts and other business entities may be participants in any sponsored captive insurance company formed or licensed under this chapter. A sponsor may be a participant in a sponsored captive insurance company. A participant need not be a shareholder of the sponsored captive insurance company or any affiliate thereof. A participant shall insure only its own risks through a sponsored captive insurance company.
2023 West Virginia Code › Chapter 33. Insurance › Article 31A. Sponsored Captive Insurance Company Formation › §33-31A-8. Investments

Notwithstanding the provisions of section five of this article, the assets of two or more protected cells may be combined for purposes of investment, and such combination shall not be construed as defeating the segregation of such assets for accounting or other purposes. Sponsored captive insurance companies shall comply with the investment requirements contained in article eight of this chapter, as applicable: Provided, That compliance with such investment requirements shall be waived for sponsored captive insurance companies to the extent that credit for reinsurance ceded to reinsurers is allowed pursuant to section eleven, article thirty-one of this chapter or to the extent otherwise deemed reasonable and appropriate by the commissioner. Notwithstanding any other provision of this chapter, the commissioner may approve the use of alternative reliable methods of valuation and rating.
2023 West Virginia Code › Chapter 33. Insurance › Article 31A. Sponsored Captive Insurance Company Formation › §33-31A-9. Delinquency

In the case of a delinquency of a sponsored captive insurance company, the provisions of section seventeen, article thirty-one of this chapter shall apply, provided:
(1) The assets of a protected cell may not be used to pay any expenses or claims other than those attributable to such protected cell; and
(2) Its capital and surplus shall at all times be available to pay any expenses of or claims against the sponsored captive insurance company.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-1. Purpose and Short Title

The purpose of this act is to regulate the formation and operation of risk retention groups and purchasing groups in this state formed pursuant to the provisions of the federal liability risk retention act of 1986, hereinafter referred to as "RRA 1986." This article may be referred to as the "Risk Retention Act of West Virginia."
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-3. Charter and License Requirements for Domestic Groups

(a) A risk retention group shall, pursuant to the provisions of article five of this chapter, be chartered and licensed to write only liability insurance pursuant to this article and, except as provided elsewhere in this article, shall comply with all of the laws, rules and requirements applicable to insurers chartered and licensed in this state and with section four of this article, to the extent such requirements are not a limitation on laws, rules or requirements of this state.
(b) Notwithstanding any other provision of this chapter to the contrary, all risk retention groups chartered in this state shall file with the commissioner and the national association of Insurance Commissioners, an annual statement on a form prescribed by the national association of Insurance Commissioners and in diskette form, if required by the commissioner and completed in accordance with the national association of Insurance Commissioners' instructions and the national association of Insurance Commissioners accounting practices and procedures manual.
(c) Before it may offer insurance in any state, each risk retention group shall also submit for approval by the Insurance Commissioner of this state a plan of operation or feasibility study. The risk retention group shall submit an appropriate revision of such plan or study, in the event of any subsequent material change in any item of the plan of operation or feasibility study, within ten days of any such change. The risk retention group shall not offer any additional kinds of liability insurance, in this state or in any other state, until a revision of the plan or study is approved by the commissioner.
(d) At the time of filing its application for a charter, the risk retention group shall provide to the commissioner in summary form the following information: The identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverages to be afforded, and the states in which the group intends to operate. Upon receipt of this information, the commissioner shall forward the information to the national association of Insurance Commissioners. Providing notification to the national association of Insurance Commissioners is in addition to and shall not be sufficient to satisfy the requirements of section four or any other sections of this article.
(e) Risk retention groups are subject to the provisions of article thirty-three, article thirty-four, article thirty-seven and article thirty-nine of this chapter.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-5. Tax on Premiums Collected

(a) Each risk retention group shall pay to the commissioner, annually on March 1, a tax at the rate of two percent of the taxable premiums on policies or contracts of insurance covering property or risks in this state and on risk and property situated elsewhere upon which no premium tax is otherwise paid during the previous year. Each risk retention group is also subject to the additional premium taxes levied by sections fourteen-a and fourteen-d, article three of this chapter.
(b) The taxes provided for in this section constitute all taxes collectible under the laws of this state from any risk retention group, and no other premium tax or other taxes shall be levied or collected from any risk retention group by the state or any county, city or municipality within this state, except ad valorem taxes. Each risk retention group shall be subject to the same interests, additions, fines and penalties for nonpayment as are generally applicable to insurers.
(c) To the extent that a risk retention group uses insurance agents, each agent shall keep a complete and separate record of all policies procured from each risk retention group. The record shall be open to examination by the commissioner, as provided in section nine, article two of this chapter. These records shall, for each policy and each kind of insurance provided under the policy, include the following:
(1) The limit of liability;
(2) The time period covered;
(3) The effective date;
(4) The name of the risk retention group which issued the policy;
(5) The gross premium charged; and
(6) The amount of return premiums, if any.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-7. Prohibitive, Deceptive, False, or Fraudulent Practices

Any risk retention group shall comply with the laws of this state, as provided in chapter thirty-three of this code, regarding prohibitive, deceptive, false or fraudulent acts or practices. However, if the commissioner seeks an injunction regarding such conduct, the injunction must be obtained from a court of competent jurisdiction.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-8. Examination Regarding Financial Condition

Any risk retention group must submit to an examination by the commissioner to determine its financial condition if the commissioner of the jurisdiction in which the group is chartered has not initiated an examination or does not initiate an examination within sixty days after a request by the commissioner of this state. Any such examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner. The risk retention group shall be subject to the provisions of section nine, article two of this chapter in regard to the expense and conduct of the examination. Any such examination shall be conducted in accordance with the national association of Insurance Commissioners examiners handbook.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-9. Notice to Purchasers

Every application form for insurance from a risk retention group and any policy issued by a risk retention group shall contain in ten-point type on the front page and the declaration page, the following notice:
NOTICE
This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and rules of your state. State insurance insolvency guaranty funds are not available for your risk retention group.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-10. Prohibited Acts Regarding Solicitation or Sale

The following acts by a risk retention group are hereby prohibited:
(1) The solicitation or sale of insurance by a risk retention group to any person who is not eligible for membership in such group; and
(2) The solicitation or sale of insurance by, or operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-13. Delinquency Proceedings

A risk retention group not chartered in this state and doing business in this state must comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by a state Insurance Commissioner if there has been a finding of financial impairment after an examination under section four of this article.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-14. Compulsory Associations

(a) A risk retention group shall not be permitted to join or contribute financially to any insurance insolvency guaranty fund, or similar mechanism, in this state, nor shall any risk retention group, or its insureds, or claimants against its insureds, receive any benefit from any such fund for claims arising out of the operations of such risk retention group.
(b) When a purchasing group obtains insurance covering its members' risks from an insurer not authorized in this state or a risk retention group, such risks, wherever resident or located, shall not be covered by any insurance guaranty fund or similar mechanism in this state.
(c) When a purchasing group obtains insurance covering its members' risks from an authorized insurer, only risks resident or located in this state shall be covered by the state guaranty fund subject to article twenty-six of this chapter.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-16. Purchasing Groups; Exemption From Certain Laws Relating to the Group Purchase of Insurance

A purchasing group and its insurer or insurers shall be subject to all applicable laws of this state, except that a purchasing group and its insurer or insurers shall be exempt, in regard to liability insurance for the purchasing group, from any law that would:
(1) Prohibit the establishment of a purchasing group;
(2) Make it unlawful for an insurer to provide or offer to provide insurance on a basis providing, to a purchasing group or its members, advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages or other matters;
(3) Prohibit a purchasing group or its members from purchasing insurance on a group basis described in subsection (b) of this section;
(4) Prohibit a purchasing group from obtaining insurance on a group basis because the group has not been in existence for a minimum period of time or because any member has not belonged to the group for a minimum period of time;
(5) Require that a purchasing group have a minimum number of members, common ownership or affiliation, or a certain legal form;
(6) Require that a certain percentage of a purchasing group obtain insurance on a group basis;
(7) Otherwise discriminate against a purchasing group or any of its members; or
(8) Require that any insurance policy issued to a purchasing group or any of its members be countersigned by an insurance agent or broker residing in this state.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-17. Notice and Registration Requirements of Purchasing Groups

(a) A purchasing group which intends to do business in this state shall, prior to doing business, furnish notice to the commissioner, on forms prescribed by the national association of Insurance Commissioners, which such forms shall:
(1) Identify the state in which the group is domiciled;
(2) Identify all other states in which the group intends to do business;
(3) Specify the lines and classifications of liability insurance which the purchasing group intends to purchase;
(4) Identify the insurance company or companies from which the group intends to purchase its insurance and the domicile of such company;
(5) Specify the method by which, and the person or persons, if any, through whom insurance will be offered to its members whose risks are resident or located in this state;
(6) Identify the principal place of business of the groups; and
(7) Provide any other information as may be required by the commissioner to verify that the purchasing group is qualified under this article.
(b) A purchasing group shall, within ten days, notify the commissioner of any changes in any of the items set forth in this section.
(c) The purchasing group shall register with and designate the commissioner,
(
or other appropriate authority
)
, as its agent solely for the purpose of receiving service of legal documents or process: Provided, That these requirements do not apply in the case of a purchasing group which:
(1) Was domiciled before April 1, 1986, in any state of the United States; and
(2) Is domiciled on and after October 27, 1986, in any state of the United States and which:
(A) Before October 27, 1986, purchased insurance from an insurance carrier licensed in any state; and
(B) Since October 27, 1986, purchased its insurance from an insurance carrier licensed in any state;
(3) Which was a purchasing group under the requirements of the product liability risk retention act of 1981, before October 27, 1986; and
(4) Which does not purchase insurance that was not authorized for purposes of an exemption under that act, as in effect before October 27, 1986.
(d) Each purchasing group that is required to give notice pursuant to subsection (a) of this section shall also furnish such information as may be required by the commissioner to:
(1) Verify that the entity qualifies as a purchasing group;
(2) Determine where the purchasing group is located; and
(3) Determine appropriate tax treatment.
(e) The Insurance Commissioner shall promulgate rules pursuant to the provisions of chapter twenty-nine-a of this code regarding the amount of all registration or filing fees required by this section.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-18. Restrictions on Insurance Purchased by Purchasing Groups

(a) A purchasing group may not purchase insurance from a risk retention group that is not chartered in a state or from an insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a licensed agent or broker acting pursuant to the surplus lines laws and regulations of such state.
(b) A purchasing group which obtains liability insurance from an insurer not admitted in this state or a risk retention group shall inform each of the members of the group which has a risk resident or located in this state that the risk is not protected by an insurance insolvency guaranty fund in this state, and that the risk retention group or insurer may not be subject to all insurance laws and regulations of this state. To give notice as required by this section, the purchasing group shall ensure that each group certificate or evidence of insurance has printed or stamped in contrasting color on the front page the following statement:
THIS INSURER IS NOT LICENSED TO DO BUSINESS IN WEST VIRGINIA, AND IS NOT SUBJECT TO THE WEST VIRGINIA INSURANCE GUARANTY ACT OR TO ALL OF THE PROTECTIONS OF THE INSURANCE LAWS AND RULES OF THIS STATE.
(c) A purchasing group shall not purchase insurance providing for a deductible or self-insured retention applicable to the group as a whole: Provided, That coverage may provide for a deductible or self-insured retention applicable to individual members.
(d) Purchases of insurance by purchasing groups are subject to the same standards regarding aggregate limits which are applicable to all purchases of group insurance.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-19. Administrative and Procedural Authority Regarding Risk Retention Groups and Purchasing Groups

The commissioner is authorized to make use of any of the powers established under this chapter of this code to enforce the laws of this state so long as those powers are not specifically preempted by the national product liability risk retention act of 1981, as amended by the risk retention amendments of 1986. This includes, but is not limited to, the commissioner's administrative authority to investigate, issue subpoenas, conduct depositions and hearings, issue orders, and impose penalties and seek injunctive relief. With regard to any investigation, administrative proceedings, or litigation, the commissioner can rely on the law and rules of the state. The injunctive authority of the commissioner in regard to risk retention groups is restricted by the requirement that any injunction be issued by a court of competent jurisdiction.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-21. Duty on Agents or Brokers to Obtain License

(a) A person, or a person working for a firm, association or corporation, shall not act or aid in any manner in soliciting, negotiating or procuring liability insurance in this state from a risk retention group unless such person, or person working for a firm, association or corporation, is licensed as an insurance agent in accordance with article twelve of this chapter.
(b) A person, or a person working for a firm, association or corporation, shall not act or aid in any manner in soliciting, negotiating or procuring liability insurance in this state for a purchasing group from an authorized insurer or a risk retention group chartered in a state unless such person, or person working for a firm, association or corporation, is licensed as an insurance agent in accordance with article twelve of this chapter.
(c) A person, or a person working for a firm, association or corporation, shall not act or aid in any manner in soliciting, negotiating or procuring liability insurance coverage in this state for any member of a purchasing group under a purchasing group's policy unless such person, or person working for a firm, association or corporation, is licensed as an insurance agent in accordance with article twelve of this chapter.
(d) A person, or a person working for a firm, association or corporation, shall not act or aid in any manner in soliciting, negotiating or procuring liability insurance from an insurer not authorized to do business in this state on behalf of a purchasing group located in this state unless such person, or person working for a firm, association or corporation, is licensed as an excess line broker in accordance with section thirteen, article twelve of this chapter.
(e) For purposes of acting as an agent for a risk retention group or purchasing group pursuant to the provisions of this section, the requirement of residence in this state shall not apply.
(f) Every person, or person working for a firm, association or corporation, licensed pursuant to the provisions of this chapter, on business placed with risk retention groups or written through a purchasing group, shall inform each prospective insured of the provisions of the notice required by section nine of this article in the case of a risk retention group and in the case of a purchasing group, the notice required by subsection (b), section eighteen of this article.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-22. Binding Effect of Orders Issued in United States District Court

An order issued by any district court of the United States enjoining a risk retention group from soliciting or selling insurance, or operating, in any state (or in all states or in any territory or possession of the United States) upon a finding that such a group is in a hazardous financial condition shall be enforceable in the courts of the state.
2023 West Virginia Code › Chapter 33. Insurance › Article 32. Risk Retention Act › §33-32-24. Operation Prior to Enactment

(a) In addition to complying with the requirements of this article, any risk retention group operating in this state prior to enactment of the amendments made to this article in the 1992 regular session of the Legislature shall comply with the provisions of subsection (a), section four of this article before December 31, 1992.
(b) Any purchasing group which was doing business in this state prior to enactment of the amendments made to this article in the 1992 regular session of the Legislature shall furnish notice to the commissioner pursuant to the provisions of section seventeen of this article before December 31, 1992.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-1. Declaration of Policy and Purpose

(a) The purpose of this article is to improve the Insurance Commissioner's surveillance of the financial condition of insurers by requiring:
(1) An annual audit of financial statements reporting the financial position and the results of operations of insurers by independent certified public accountants;
(2) Communication of internal control related matters noted in an audit; and
(3) Management's report of internal control over financial reporting.
(b) Every insurer, as defined in subdivision (7), section two of this article, shall be subject to this article. Insurers having direct premiums written in this state of less than $1 million in any calendar year and less than one thousand policyholders or certificate holders of directly written policies nationwide at the end of the calendar year shall be exempt from this article for the year, unless the commissioner makes a specific finding that compliance is necessary for the commissioner to carry out statutory responsibilities. However, insurers having assumed premiums pursuant to contracts and/or treaties of reinsurance of $1 million or more will not be so exempt.
(c) Foreign or alien insurers filing audited financial reports in another state, pursuant to the other state's requirement for filing of audited financial reports which has been found by the commissioner to be substantially similar to the requirements herein, are exempt from sections three through eleven of this article if:
(1) A copy of the audited financial report, communication of internal control-related matters noted in an audit, report on significant deficiencies in internal controls and the accountant's letter of qualifications which are filed with the other state are filed with the commissioner in accordance with the filing dates specified in sections three, ten and ten-a of this article, respectively. Canadian insurers may submit accountants' reports as filed with the Office of the superintendent of Financial Institutions, Canada.
(2) A copy of any notification of adverse financial condition report filed with the other state is filed with the commissioner within the time specified in section nine of this article.
(d) Foreign or alien insurers required to file Management's Report of Internal Control over Financial Reporting in another state are exempt from filing the report in this state provided the other state has substantially similar reporting requirements and the report is filed with the commissioner of the other state within the time specified.
(e) This article shall not prohibit or preclude or in any way limit the commissioner from performing examinations of insurers as specified in section nine, article two of this chapter or any other examinations as the commissioner may be authorized by this chapter to perform.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-3. General Requirements Related to Filing and Extensions for Filing of Annual Audited Financial Reports and Audit Committee Appointment

(a) All insurers shall have an annual audit by an independent certified public accountant and shall file an audited financial report with the commissioner on or before June 1 for the year ending December 31 immediately preceding. The commissioner may require an insurer to file an audited financial report earlier than June 1 with ninety days advance notice to the insurer.
(b) Extensions of the filing date on June 1 may be granted by the commissioner for thirty-day periods upon showing by the insurer and its independent certified public accountant the reasons for requesting the extension and determination by the commissioner of good cause for an extension. A request for extension must be submitted in writing not less than ten days prior to the due date in sufficient detail to permit the commissioner to make an informed decision with respect to the requested extension.
(c) If an extension is granted in accordance with the provisions in subsection (b) of this section, a similar extension of thirty days is granted to the filing of management's report of internal control over financial reporting.
(d) Every insurer required to file an annual audited financial report pursuant to this article shall designate a group of individuals as constituting its audit committee, as defined in subdivision (3), section two of this article. The audit committee of an entity that controls an insurer may be deemed to be the insurer's audit committee for purposes of this article at the election of the controlling person.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-4. Contents of Annual Audited Financial Report

(a) The annual audited financial report shall report the financial condition of the insurer as of the end of the most recent calendar year and the results of its operations, cash flows and changes in capital and surplus for the year then ended in conformity with statutory accounting practices prescribed, or otherwise permitted, by the Insurance Commissioner of the state of domicile.
(b) The annual audited financial report shall include the following:
(1) Report of independent certified public accountant;
(2) Balance sheet reporting admitted assets, liabilities, capital and surplus;
(3) Statement of operations;
(4) Statement of cash flow;
(5) Statement of changes in capital and surplus;
(6) Notes to financial statements. These notes shall be those required by the appropriate National Association of Insurance Commissioners annual statement instructions and accounting practices and procedures manual, as amended, including reconciliation differences, if any, between the audited statutory financial statements and the annual statement filed pursuant to section fourteen, article four of this chapter, with a written description of the nature of these differences; and
(7) The financial statements included in the audited financial report shall be prepared in a form and using language and groupings substantially the same as the relevant sections of the annual statement of the insurer filed with the commissioner, and
The financial statement shall be comparative, presenting the amounts as of December 31 of the current year and the amounts as of the immediately preceding December 31. However, in the first year in which an insurer is required to file an audited financial report, the comparative data may be omitted.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-5. Designation of Independent Certified Public Accountant

(a) Each insurer required by this article to file an annual audited financial report must, within sixty days after becoming subject to the requirements, register with the commissioner in writing the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit set forth in this article. Insurers not retaining an independent certified public accountant on the effective date of this article shall register the name and address of their retained independent certified public accountant not less than six months before the date when the first audited financial report is to be filed.
(b) The insurer shall obtain a letter from the accountant, and file a copy with the commissioner stating that the accountant is aware of the provisions of this code and legislative rules promulgated pursuant to article three, chapter twenty-nine-a of this code that relate to accounting and financial matters and affirming that the accountant will express his or her opinion on the financial statements in terms of his or her conformity to the statutory accounting practices prescribed or otherwise permitted by the Insurance Commissioner specifying any exceptions as he or she may believe appropriate.
(c) If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns, the insurer shall within five business days notify the commissioner of this event. The insurer shall also furnish the commissioner with a separate letter within ten business days of the above notification stating whether in the twenty-four months preceding the notification there were any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused him or her to make reference to the subject matter of the disagreement in connection with his or her opinion. The disagreements required to be reported in response to this section include both those resolved to the former accountant's satisfaction and those not resolved to the former accountant's satisfaction. Disagreements contemplated by this section are those that occur at the decision-making level between personnel of the insurer responsible for presentation of its financial statements and personnel of the accounting firm responsible for rendering its report. The insurer shall also in writing request the former accountant to furnish it a letter addressed to the insurer stating whether the accountant agrees with the statements contained in the insurer's letter and, if not, stating the reasons for which he or she does not agree; and the insurer shall furnish the responsive letter from the former accountant to the commissioner together with its own.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-7. Consolidated or Combined Audits

An insurer may make written application to the commissioner for approval to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements if the insurer is part of a group of insurance companies which utilizes a pooling or one hundred percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer cedes all of its direct and assumed business to the pool. If an approval is granted, a columnar consolidating or combining worksheet shall be filed with the report incorporating the following:
(1) Amounts shown on the consolidated or combined audited financial report shall be shown on the worksheet;
(2) Amounts for each insurer subject to this section shall be stated separately;
(3) Noninsurance operations may be shown on the worksheet on a combined or individual basis;
(4) Explanations of consolidating and eliminating entries shall be included; and
(5) A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the worksheet and comparable amounts shown on the annual statements of the insurers.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-8. Scope of Audit and Report of Independent Certified Public Accountant

Financial statements furnished pursuant to section four of this article shall be examined by the independent certified public accountant. The audit of the insurer's financial statements shall be conducted in accordance with generally accepted auditing standards. In accordance with AU Section 319 of the professional standards of the American Institute of Certified Public Accountants, "Consideration of Internal Control in a Financial Statement Audit" or its replacement, the independent certified public accountant should obtain an understanding of internal control sufficient to plan the audit. To the extent required by AU 319, for those insurers required to file a management's report of internal control over financial reporting pursuant to section fifteen of this article, the independent certified public accountant should consider, as that term is defined in Statement on Auditing Standards No. 102, "Defining Professional Requirements in Statements on Auditing Standards" or its replacement, the most recently available report in planning and performing the audit of the statutory financial statements. Consideration shall be given to the procedures illustrated in the Financial Condition Examiners Handbook promulgated by the National Association of Insurance Commissioners as the independent certified public accountant deems necessary.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-9. Notification of Adverse Financial Condition

(a) The insurer required to furnish the annual audited financial report shall require the independent certified public accountant to report, in writing, within five business days to the board of directors or its audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the commissioner as of the balance sheet date currently under audit or that the insurer does not meet the minimum capital and surplus requirements of this chapter as of that date. An insurer that has received a report pursuant to this subsection shall forward a copy of the report to the commissioner within five business days of receipt of the report and shall provide the independent certified public accountant making the report with evidence of the report being furnished to the commissioner. If the independent certified public accountant fails to receive the evidence within the required five business day period, the independent certified public accountant shall furnish to the commissioner a copy of his or her report within the next five business days.
(b) No independent public accountant shall be liable in any manner to any person for any statement made in connection with subsection (a) of this section if the statement is made in good faith in compliance with said subsection.
(c) If the accountant, subsequent to the date of the audited financial report filed pursuant to this article, becomes aware of facts which might have affected the report, the commissioner notes the obligation of the accountant to take action as prescribed in volume 1, section AU 561 of the professional standards of the American Institute of Certified Public Accountants.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-10. Communication of Internal Control Related Matters Noted in an Audit

(a) In addition to the annual audited financial report, each insurer shall furnish the commissioner with a written communication as to any unremediated material weaknesses in its internal control over financial reporting noted by the accountant during the audit. Such communication shall be prepared by the accountant within sixty days after the filing of the annual audited financial report, and shall contain a description of any unremediated material weakness, as the term material weakness is defined by Statement on Auditing Standards (SAS) No. 60, "Communication of Internal Control Related Matters Noted in an Audit" or its replacement, as of December 31 immediately preceding, so as to coincide with the audited financial report discussed in subsection (a), section three of this article, in the insurer's internal control over financial reporting noted by the accountant during the course of their audit of the financial statements. If no unremediated material weaknesses were noted, the communication should so state.
(b) The insurer is required to provide a description of remedial actions taken or proposed to correct unremediated material weaknesses, if the actions are not described in the accountant's communication.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-10a. Accountant's Letter of Qualifications

The accountant shall furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report, a letter stating:
(1) That the accountant is independent with respect to the insurer and conforms to the standards of his or her 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 West Virginia Board of Accountancy, or similar code;
(2) The background and experience in general, and the experience in audits of insurers of the staff assigned to the engagement and whether each is an independent certified public accountant. Nothing within this article shall be construed as prohibiting the accountant from utilizing such staff as he or she deems appropriate where use is consistent with the standards prescribed by generally accepted auditing standards;
(3) That the accountant understands the annual audited financial report and his or her opinion thereon will be filed in compliance with this article and that the commissioner will be relying on this information in the monitoring and regulation of the financial position of insurers;
(4) That the accountant consents to the requirements of section eleven of this article and that the accountant consents and agrees to make available for review by the commissioner, or the commissioner's designee or appointed agent, the workpapers, as defined in section eleven of this article;
(5) A representation that the accountant is properly licensed by an appropriate state licensing authority and is a member in good standing in the American Institute of Certified Public Accountants; and
(6) A representation that the accountant is in compliance with the requirements of section six of this article.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-11. Definition, Availability and Maintenance of Independent Certified Public Accountant Workpapers

(a) Workpapers are the records kept by the independent certified public accountant of the procedures followed, the tests performed, the information obtained, and the conclusions reached pertinent to the accountant's audit of the financial statements of an insurer. Workpapers may include audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of his or her audit of the financial statements of an insurer and which support the accountant's opinion.
(b) Every insurer required to file an audited financial report pursuant to this article shall require the accountant to make available for review by the commissioner all workpapers prepared in the conduct of the accountant's audit and any communications related to the audit between the accountant and the insurer, at the offices of the insurer, at the insurance department or at any other reasonable place designated by the commissioner. The insurer shall require that the accountant retain the audit workpapers and communications until the commissioner has filed a report of examination, as required by section nine, article two of this chapter, covering the period of the audit but no longer than seven years from the date of the audit report.
(c) In the conduct of the aforementioned periodic review by the commissioner, it shall be agreed that copies of pertinent audit workpapers may be made and retained by the commissioner. Reviews by the commissioner shall be considered investigations and all workpapers and communications obtained during the course of such investigations shall be afforded the same confidentiality as other examination workpapers generated by the commissioner.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-12a. Internal Audit Function Requirements

(a) An insurer is exempt from the requirements of this section if:
(1) The insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500 million; and
(2) If the insurer is a member of a group of insurers, the group has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1 billion.
(b) The insurer or group of insurers shall establish an internal audit function providing independent, objective and reasonable assurance to the audit committee and insurer management regarding the insurers governance, risk management and internal controls. This assurance shall be provided by performing general and specific audits, reviews and tests and by employing other techniques deemed necessary to protect assets, evaluate control effectiveness and efficiency, and evaluate compliance with policies and regulations.
(c) In order to ensure that internal auditors remain objective, the internal audit function must be organizationally independent. Specifically, the internal audit function may not defer ultimate judgment on audit matters to others, and shall appoint an individual to head the internal audit function who will have direct and unrestricted access to the board of directors. Organizational independence does not preclude dual-reporting relationships.
(d) The head of the internal audit function shall report to the audit committee regularly, but no less than annually, on the periodic audit plan, factors that may adversely impact the internal audit functions independence or effectiveness, material findings from completed audits and the appropriateness of corrective actions implemented by management as a result of audit findings.
(e) If an insurer is a member of an insurance holding company system or included in a group of insurers, the insurer may satisfy the internal audit function requirements set forth in this section at the ultimate controlling parent level, an intermediate holding company level or the individual legal entity level.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-13. Conduct of Insurer in Connection With the Preparation of Required Reports and Documents

(a) No director or officer of an insurer shall, directly or indirectly:
(1) Make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review or communication required under this article; or
(2) Omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which the statements were made, not misleading to an accountant in connection with any audit, review or communication required under this article.
(b) No officer or director of an insurer, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead or fraudulently influence any accountant engaged in the performance of an audit pursuant to this article if that person knew or should have known that the action, if successful, could result in rendering the insurer's financial statements materially misleading.
(c) For purposes of subsection (b) of this section, actions that, "if successful, could result in rendering the insurer's financial statements materially misleading" include, but are not limited to, actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead or fraudulently influence an accountant:
(1) To issue or reissue a report on an insurer's financial statements that is not warranted in the circumstances due to material violations of statutory accounting principles prescribed by the commissioner, generally accepted auditing standards, or other professional or regulatory standards;
(2) Not to perform audit, review or other procedures required by generally accepted auditing standards or other professional standards;
(3) Not to withdraw an issued report; or
(4) Not to communicate matters to an insurer's audit committee.
2023 West Virginia Code › Chapter 33. Insurance › Article 33. Annual Audited Financial Report › §33-33-14. Canadian and British Companies

(a) In the case of Canadian and British insurers, the annual audited financial report shall be defined as the annual statement of total business on the form filed by the companies with their supervision authority duly audited by an independent chartered accountant.
(b) For Canadian and British insurers, the letter required in subsection (b), section five of this article shall state that the accountant is aware of the requirements relating to the annual audited financial report filed with the commissioner pursuant to section three of this article and shall affirm that the opinion expressed is in conformity with those requirements.