Code of Maryland Regulations › Title 31 - MARYLAND INSURANCE ADMINISTRATION › Subtitle 05 - ASSETS, LIABILITIES, RESERVES, AND INVESTMENTS OF INSURERS › Chapter 31.05.11 - Annual Financial Reporting › Section 31.05.11.16 - Management's Report on Internal Control over Financial Reporting

Current through Register Vol. 51, No. 14, July 12, 2024
A. An insurer required to file an audited financial report pursuant to this chapter that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of $500,000,000 or more shall prepare a report (Management's Report on Internal Control over Financial Reporting) of the insurer's or group of insurers' internal control over financial reporting, as these terms are defined in Regulation .02 of this chapter.
B. The report shall be filed with the Commissioner along with the Communication of Internal Control Related Matters Noted in an Audit described under Regulation .10 of this chapter. Management's Report on Internal Control over Financial Reporting shall be as of the immediately preceding December 31.
C. Notwithstanding the premium threshold in §A of this regulation, the Commissioner may require an insurer to file Management's Report on Internal Control over Financial Reporting if the insurer is in any risk-based capital (RBC) level event, or meets any one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in Insurance Article, Title 9, Annotated Code of Maryland.
D. Alternative Filing.
(1) An insurer or a group of insurers that is directly subject to Section 404, part of a holding company system whose parent is directly subject to Section 404, not directly subject to Section 404 but is a SOX compliant entity, or a member of a holding company system whose parent is not directly subject to Section 404 but is a SOX compliant entity, may file its or its parent's Section 404 report and an addendum in satisfaction of this regulation if the internal controls of the insurer or group of insurers having a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements (those items included in Regulation .04B(2)-(6) of this chapter) were included in the scope of the Section 404 report.
(2) The addendum shall be a positive statement by management that there are no material processes with respect to the preparation of the insurer's or group of insurers' audited statutory financial statements (those items included in Regulation .04B(2)-(6) of this chapter) excluded from the Section 404 report.
(3) If there are internal controls of the insurer or group of insurers that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements and those internal controls were not included in the scope of the Section 404 report, the insurer or group of insurers may either file:
(a) A Management's Report on Internal Control over Financial Reporting; or
(b) The Section 404 report and a Management's Report on Internal Control over Financial Reporting for those internal controls that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements not covered by the Section 404 report.