Florida Administrative Code › 69 - DEPARTMENT OF FINANCIAL SERVICES › 69O - OIR - Insurance Regulation › Chapter 69O-138 - FINANCIAL EXAMINATIONS AND REQUIREMENTS › Section 69O-138.005 - Exams By Non Employees

Current through Reg. 50, No. 138; July 16, 2024
(1) The Office is
				required by Section 624.316(1)(a),
				F.S., to examine the affairs, transactions, accounts, records and assets of
				each authorized insurer and of the attorney in fact of a reciprocal insurer.
				The examination standards with which the Office must comply are established by
				statute and adopted by rule. The statutes and rules meet the requirements of
				the National Association of Insurance Commissioners for accreditation in the
				area of financial regulation. Any report received from another jurisdiction
				pursuant to this rule is received for purposes of assessing the financial
				condition of the insurer and not any other purpose. Any information contained
				in such a report which would be the subject of a market conduct report prepared
				by this Office is not relevant to this rule. The Office will be bound only by
				the information relevant to the financial condition of the insurer.
(2) Section
				624.316(2)(b),
				F.S., requires the Office to examine each insurer applying for an initial
				Certificate of Authority to transact business in this state before granting the
				initial certificate. For purposes of this provision, the Office will, in the
				absence of a reasonable belief that the examination report is not accurate,
				accept the examination report of a foreign insurer as prepared by the insurance
				office of the insurer's domiciliary state if the domiciliary insurance office
				is accredited by the National Association of Insurance Commissioners in the
				area of financial regulation or if the examination is performed under the
				supervision of or with the participation of an examiner from a state which is
				so accredited and who, after a review of the examination work papers and
				report, state under oath that the examination was performed in a manner
				consistent with the standards and procedures required by their Insurance
				Office.
(3) Section
				624.316(2)(c),
				F.S., permits the Office, in lieu of making its own examination of a foreign
				insurer, to accept a full report of the most recent examination of a foreign
				insurer, as certified to by the insurance supervisory official of another
				state. For purposes of this provision, the Office will, in the absence of a
				reasonable belief that the examination report is not accurate, accept the
				examination report of a foreign insurer as prepared by the insurance office of
				the insurer's domiciliary state if the domiciliary insurance office is
				accredited by the National Association of Insurance Commissioners in the area
				of financial regulation or if the examination is performed under the
				supervision of or with the participation of an examiner from a state which is
				so accredited and who, after a review of the examination work papers and
				report, states under oath that the examination was performed in a manner
				consistent with the standards and procedures required by that Insurance Office.
				Such reports of examination must be certified to by the insurance supervisory
				official of the state of domicile and mailed to the Office within 10 calendar
				days of receipt by the insurer, except that, if the report shows that the
				insurer has materially misstated its financial condition or that the insurer
				does not meet the minimum capital and surplus requirements of the Florida
				Insurance Code, the report must be sent to the Office within 5 business days of
				receipt using a facility that offers next day delivery service. A material
				misstatement is defined as a collective amount of 10% or more of total assets,
				total liabilities, or total capital and surplus.
(4) Section
				624.316(2)(e),
				F.S., allows the Office to conduct examinations of an insurer by contracting
				for the services of an independent Certified Public Accountant, an actuary, a
				reinsurance specialist, an investment specialist, information technology
				specialist, or any combination of these individuals, as the particular
				circumstances of the examination require. An examination performed pursuant to
				this subsection must meet the requirements of subsection (1).
(a) An actuary meeting the criteria
				established in Rule 69O-138.043 or
				69O-170.031, F.A.C., will
				qualify to conduct an examination under this subsection.
(b)
1. A
				reinsurance specialist shall be qualified to conduct an examination under this
				subsection if that contractor can demonstrate competency by education and
				experience to perform such an examination. Competency by education and
				experience shall be demonstrated if any one of the following is true:
a. An individual qualifies as an actuary
				pursuant to either Rule
				69O-138.043 or
				69O-170.031, F.A.C., and has at
				least one years' experience with the kind of reinsurance which will be the
				subject of the examination.
b. An
				individual has a bachelor's degree from an accredited college or university and
				four years of professional experience in insurance/reinsurance accounting or in
				reinsurance transactions. A master's degree from an accredited college or
				university in accounting, insurance, or risk management can substitute for one
				year of the required experience. Professional experience as described above can
				substitute on a year-for-year basis for the required education.
c. An individual is in good standing with the
				Society of Financial Examiners and is certified by that organization to be
				eligible to hold the title of Certified Financial Examiner.
2. In selecting a person as a reinsurance
				specialist the Office shall consider the individual's experience, knowledge,
				skill, and abilities as they relate to the needs of the examination to be
				performed. This consideration shall include the individual's experience with
				the kind of insurance which is the subject of the examination; knowledge of
				accounting principles, practices and procedures; ability to prepare financial
				statements to reflect the reinsurance transactions; ability to provide
				professional and technical assistance; understanding of risk transfer as
				defined in the NAIC Examiners Handbook and the NAIC Accounting Practices and
				Procedures and Annual Statement Instruction Manuals, as adopted in Rule
				69O-137.001, F.A.C.; and the
				ability to evaluate claims experience, both reported and incurred but not
				reported, relevant to the type of insurance which is the subject of the
				examination.
(c)
1. An investment specialist shall be
				qualified to conduct an examination under this subsection if that contractor
				can demonstrate competency by education and experience to perform such an
				examination in that capacity. Competency by education and experience shall be
				demonstrated if any one of the following is true:
a. An individual has a bachelor's degree from
				an accredited college or university and four years of professional experience
				in the capacity for which the contractor is to perform. A master's degree from
				an accredited college or university in accounting, or finance can substitute
				for one year of the required experience. Professional experience as described
				above can substitute on a year-for-year basis for the required
				education.
b. An individual is in
				good standing with the Society of Financial Examiners and is certified by that
				organization to be eligible to hold the title of Certified Financial
				Examiner.
2. In selecting
				a person as an investment specialist the Office shall consider the individual's
				experience, knowledge, skill, and abilities as they relate to the needs of the
				examination to be performed.
(d)
1. An
				information technology specialist shall be qualified to conduct an examination
				under this subsection if that contractor can demonstrate competency by
				education and experience to perform such an examination in that capacity.
				Competency by education and experience shall be demonstrated if the individual
				has a bachelor's degree from an accredited college or university and four years
				of professional experience in the capacity for which the contractor is to
				perform. A master's degree from an accredited college or university in
				information technology or a similar field can substitute for one year of the
				required experience. Professional experience as described above can substitute
				on a year-for-year basis for the required education.
2. In selecting a person as an information
				technology specialist the Office shall consider the individual's experience,
				knowledge, skill, and abilities as they relate to the needs of the examination
				to be performed.
(e) The
				firm selected by the office to perform the examination shall have no conflicts
				of interest that might affect its ability to independently perform its
				responsibilities on the examination.
(f) The rates charged to the insurer being
				examined under the contract shall be consistent with rates charged by other
				firms in a similar profession and shall be comparable with the rates charged
				for comparable examinations. The rates and terms shall be set forth in the
				contract.
(g) Contractors may
				submit a curriculum vitae detailing their experience and qualifying credentials
				to the Office, as well as a proposed hourly rate for services to be performed.
				The acceptability of a contractor to the Office shall be determined based on
				consideration of the firm's professional competence, objectivity, and that the
				rates charged are consistent with rates charged by other firms in a similar
				profession, as referenced in subsection (4), above, providing comparable
				services, so as to protect the examined insurer from being overcharged for the
				examination. Once a contractor has been accepted by the Office, they will be
				placed on a list of eligible examination contractors.
(h) In selecting contractors to conduct a
				specific examination, the Office shall consider the contractor's experience,
				knowledge, skill, and abilities as they relate to the needs of the examination
				to be performed. This consideration shall include the contractor's experience
				with the kind of insurance which is the subject of the examination.
(i) After a contractor has been selected for
				a specific examination the Office shall enter into a contract with the
				contractor, detailing the scope of work for the engagement. The contract shall
				include a provision that the contractor has no conflict of interest that might
				affect its ability to independently perform its responsibilities. The
				contractor shall submit all requests for payment to the Office in the manner
				prescribed by the contract.
(j) All
				requests for reimbursement of travel expenses are to be made on Form
				DFS-C1-500,
http://www.flrules.org/Gateway/reference.asp?No=Ref-08299
,
				State of Florida Voucher For Reimbursement of Travel Expenses, (Rev. 12/13).
				This form is incorporated by reference and adopted by this rule for this
				purpose. It is available at
http://www.floir.com/sitedocuments/DFS-C1-500.xls
.
(k) Upon receipt and review of the
				contractor's request for payment, the Office will invoice the insurer being
				examined and the insurer shall make payment to the Office pursuant to Sections
				624.316(2)(e)3. and 624.320(1),
				F.S.
(l) Upon receipt of the
				payment from the insurer being examined, the Office will make payment to the
				contractor in accordance with the rates and terms set out in the
				contract.