Pennsylvania Code › Title 31 - INSURANCE › Part VIII - Miscellaneous Provisions › Chapter 147 - ANNUAL FINANCIAL REPORTING REQUIREMENTS › Section 147.9b - Management's report of internal control over financial reporting

Current through Register Vol. 54, No. 28, July 13, 2024
(a) An insurer that
				is required to file an audited financial report and that has annual direct
				written and assumed premiums equal to or greater than $500,000,000, excluding
				premiums reinsured with the Federal Crop Insurance Corporation and Federal
				Flood Program, shall file with the Department a management's report of internal
				control over financial reporting of the insurer or insurer group. A
				management's report of internal control over financial reporting shall be filed
				for an insurer group if the annual direct written and assumed premiums of any
				one insurer in the group is equal to or greater than $500,000,000, excluding
				premiums reinsured with the Federal Crop Insurance Corporation and Federal
				Flood Program. However, the Commissioner may require an insurer that has less
				than $500,000,000 in annual direct written and assumed premiums, excluding
				premiums reinsured with the Federal Crop Insurance Corporation and Federal
				Flood Program, to file a management's report of internal control over financial
				reporting under sections 501-563, 501-A-515-A, and 501-B-515-B of The Insurance
				Department Act of 1921 (40 P.S. §§
										221.1-221.63,
				221.1-A-221.15-A and
				221.1-B-221.15-B) regarding suspension of business and risk-based capital
				requirements, Chapter 160 (relating to standards to define insurers deemed to
				be in hazardous financial condition) or other provisions of law. If an insurer
				previously not required to file a management's report of internal control over
				financial reporting because it did not meet the $500,000,000 threshold is
				subsequently required to file the report because its premiums equal or exceed
				the threshold, the insurer or the insurer group shall have 2 years following
				the year the threshold is exceeded to file the report.
(b) The management's report of internal
				control over financial reporting shall be prepared by management as of the
				immediately preceding December 31, filed with the report of internal control
				related matters required under §
									147.9a (relating to establishment
				and communication of internal control over financial reporting) and include:
(1) Statement that management is responsible
				for establishing and maintaining adequate internal control over financial
				reporting.
(2) Statement that
				management has established internal control over financial reporting.
(3) Brief description of the approach or
				processes by which management evaluated the effectiveness of its internal
				control over financial reporting.
(4) Disclosure of any unremediated material
				weaknesses in the internal control over financial reporting identified by
				management as of the immediately preceding December 31.
(5) Assertion to the best of management's
				knowledge and belief, after diligent inquiry, as to whether its internal
				control over financial reporting is effective to provide reasonable assurance
				regarding the reliability of financial statements in accordance with statutory
				accounting principles.
(A) Management may base
				its assertion, in part, upon its review, monitoring and testing of internal
				controls undertaken in the normal course of its activities.
(B) Management may not assert that internal
				control over financial reporting is effective to provide reasonable assurance
				regarding the reliability of financial statements in accordance with statutory
				accounting principles if one or more unremediated material weaknesses in
				internal control over financial reporting are disclosed as required by
				paragraph (4).
(C) Management shall
				create and maintain documentation relating to the basis upon which its
				assertion in management's report of internal control over financial reporting
				is made. Management shall have discretion as to the nature and extent of
				documentation to make its assertion in a cost-effective manner, including
				assembly of or reference to existing documentation. The documentation shall be
				made available to Department examiners and given confidential treatment under
				the authority of sections 901-908 of The Insurance Department Act of 1921
				(40
				P.S. §§
												323.1-323.8).
(6) Statement regarding the inherent
				limitations of internal control systems.
(7) Signatures of chief executive officer and
				chief financial officer or individuals holding equivalent positions. A
				management's report of internal control over financial reporting filed for an
				insurer group must include a statement identifying the officers or individuals
				in equivalent positions who have been authorized by management to sign the
				report on behalf of the affiliated insurers in the group.