§ 10-7-607 — Examinations

Colorado § 10-7-607

• Jurisdiction: Colorado
• Title 10: Insurance
• Art.: Life Insurance

Text

(1) Authority, scope, and scheduling of
examinations. (a) The commissioner may conduct an examination under this part 6
of a licensee as often as the commissioner in his or her sole discretion deems
appropriate.

(b) For purposes of completing an examination of a licensee under this part
6, the commissioner may examine or investigate any person, or the business of any
person, in so far as the examination or investigation is, in the sole discretion of the
commissioner, necessary or material to the examination of the licensee.

(c) In lieu of an examination under this part 6 of any foreign or alien licensee
licensed in this state, the commissioner may, at the commissioner's discretion,
accept an examination report on the licensee as prepared by the commissioner for
the licensee's state of domicile or port-of-entry state.

(2) Record retention requirements. (a) A person required to be licensed
under this part 6 shall for five years retain copies of all:

(I) Proposed, offered, or executed contracts, underwriting documents, policy
forms, and applications from the date of the proposal, offer, or execution of the
contract, whichever is later;

(II) Checks, drafts, or other evidence and documentation related to the
payment, transfer, deposit, or release of moneys from the date of the transaction;
and

(III) Other records and documents related to the requirements of this part 6.

(b) This section does not relieve a person of the obligation to produce the
documents listed in paragraph (a) of this subsection (2) to the commissioner after
the retention period has expired if the person has retained the documents.

(c) Records required to be retained by this subsection (2) shall be legible and
complete and may be retained in paper, photograph, microprocess, magnetic,
mechanical, or electronic media, or by any process that accurately reproduces or
forms a durable medium for the reproduction of a record.

(3) Conduct of examinations. (a) Upon determining that an examination
should be conducted, the commissioner shall issue an examination warrant
appointing one or more examiners to perform the examination and instructing the
examiner as to the scope of the examination. In conducting the examination, the
examiner shall observe those guidelines and procedures set forth in the examiner's
handbook adopted by the NAIC. The commissioner may also employ such other
guidelines or procedures as the commissioner may deem appropriate.

(b) Every licensee or person from whom information is sought, and its
officers, directors, and agents, shall provide to the examiners timely, convenient,
and free access at all reasonable hours at its offices to all books, records, accounts,
papers, documents, assets, and computer or other recordings relating to the
property, assets, business, and affairs of the licensee being examined. The officers,
directors, employees, and agents of the licensee or person shall facilitate the
examination and aid in the examination so far as it is in their power to do so. The
refusal of a licensee, by its officers, directors, employees, or agents, to submit to
examination or to comply with any reasonable written request of the commissioner
shall be grounds for suspension, refusal, or nonrenewal of any license or authority
held by the licensee to engage in the viatical settlement business or other business
subject to the commissioner's jurisdiction. Any proceedings for suspension,
revocation, or refusal of any license or authority shall be conducted pursuant to the
State Administrative Procedure Act, article 4 of title 24, C.R.S.

(c) The commissioner shall have the power to issue subpoenas, to administer
oaths, and to examine under oath any person as to any matter pertinent to the
examination. Upon the failure or refusal of a person to obey a subpoena, the
commissioner may petition a court of competent jurisdiction and, upon proper
showing, the court may enter an order compelling the witness to appear and testify
or produce documentary evidence. Failure to obey the court order shall be
punishable as contempt of court.

(d) When making an examination under this part 6, the commissioner may
retain attorneys, appraisers, independent actuaries, independent certified public
accountants, or other professionals and specialists as examiners. The reasonable
cost of such examiners' services shall be borne by the licensee that is the subject of
the examination.

(e) Nothing contained in this part 6 shall be construed to limit the
commissioner's authority to terminate or suspend an examination in order to pursue
other legal or regulatory action pursuant to the insurance laws of this state.
Findings of fact and conclusions made pursuant to any examination shall be prima
facie evidence in any legal or regulatory action.

(f) Nothing contained in this part 6 shall be construed to limit the
commissioner's authority to use and, if appropriate, to make public any final or
preliminary examination report, any examiner or licensee workpapers or other
documents, or any other information discovered or developed during the course of
any examination in the furtherance of any legal or regulatory action that the
commissioner may, in his or her sole discretion, deem appropriate.

(g) The licensee shall pay the charges incurred in the examination, including
the expenses of the commissioner or the commissioner's designee and the
expenses and compensation of the commissioner's examiners and assistants. If a
licensee believes that the fees assessed are unreasonable in relation to the
examination performed, the licensee may appeal the assessments to and seek
judicial review by the district court in and for the city and county of Denver
pursuant to the State Administrative Procedure Act, article 4 of title 24, C.R.S. If
no hearing is requested or, if after a hearing and appeal process, the licensee
refuses or fails to pay, the commissioner or his designee shall promptly institute a
civil action against the licensee to recover the expenses of examination.

(4) Examination reports. (a) Examination reports shall consist only of facts
appearing upon the books, records, or other documents of the licensee, its agents,
or other persons examined, or as ascertained from the testimony of its officers or
agents or other persons examined concerning its affairs, and such conclusions and
recommendations as the examiners find reasonably warranted from the facts.

(b) No later than sixty days following completion of the examination, the
examiner in charge shall file with the commissioner a verified written report of
examination under oath. Upon receipt of the verified report, the commissioner shall
transmit the report to the licensee examined, together with a notice that shall
afford the licensee examined a reasonable opportunity of not more than thirty days
to make a written submission or rebuttal with respect to any matters contained in
the examination report.

(c) Within thirty days after the end of the period allowed for the receipt of
written submissions or rebuttals, the commissioner shall fully consider and review
the report, together with any written submissions or rebuttals and any relevant
portions of the examiner's workpapers, and enter an order:

(I) Adopting the examination report as filed or with modification or
corrections. If the examination report reveals that the licensee is operating in
violation of any law, rule, or prior order of the commissioner, the commissioner may
order the licensee to take any action the commissioner considers necessary and
appropriate to cure the violation.

(II) Rejecting the examination report with directions to the examiners to
reopen the examination for purposes of obtaining additional data, documentation,
or information and refiling; or

(III) Calling for an investigatory hearing with no less than twenty days' notice
to the licensee for purposes of obtaining additional documentation, data,
information, and testimony.

(d) All orders entered pursuant to this subsection (4) shall be accompanied
by findings and conclusions resulting from the commissioner's consideration and
review of the examination report, the relevant examiner workpapers, and any
written submissions or rebuttals. Any examination warrant issued pursuant to
paragraph (a) of subsection (3) of this section shall be considered a final
administrative decision, review of which may be sought in the district court in and
for the city and county of Denver pursuant to the State Administrative Procedure
Act, article 4 of title 24, C.R.S., and shall be served upon the licensee by certified
mail together with a copy of the adopted examination report. Within thirty days
after the issuance of the adopted report, the licensee shall file affidavits executed
by each of its directors stating under oath that they have received a copy of the
adopted report and related orders.

(e) Hearings conducted pursuant to this section shall be subject to the
following requirements:

(I) Any hearing conducted pursuant to this section by the commissioner or
the commissioner's authorized representative shall be conducted as a
nonadversarial, confidential investigatory proceeding as necessary for the
resolution of any inconsistencies, discrepancies, or disputed issues apparent upon
the face of the filed examination report or raised by or as a result of the
commissioner's review of relevant workpapers or by the written submission or
rebuttal of the licensee. Within twenty days after the conclusion of any hearing, the
commissioner shall enter an order pursuant to subparagraph (I) of paragraph (c) of
this subsection (4).

(II) The commissioner shall not appoint an examiner as an authorized
representative to conduct the hearing. The hearing shall proceed expeditiously,
with discovery by the licensee limited to the examiner's workpapers that tend to
substantiate any assertions set forth in any written submission or rebuttal. The
commissioner or the commissioner's representative may issue subpoenas for the
attendance of any witnesses or the production of any documents considered
relevant to the investigation, whether under the control of the commissioner, the
company, or other persons. The documents produced shall be included in the
record, and testimony taken by the commissioner or the commissioner's
representative shall be under oath and preserved for the record. Nothing contained
in this section shall require the commissioner to disclose any information or records
that would indicate or show the existence or content of any investigation or activity
of a criminal justice agency.

(III) The hearing shall proceed with the commissioner or the commissioner's
representative posing questions to the persons subpoenaed. Thereafter, the
licensee and the division may present testimony relevant to the investigation.
Cross-examination may be conducted only by the commissioner or the
commissioner's representative. The licensee and the commissioner shall be
permitted to make closing statements and may be represented by counsel of their
choice.

(f) If the commissioner determines that regulatory action is appropriate as a
result of an examination, the commissioner may initiate any proceedings or actions
provided by law.

(g) No provision of this part 6 shall prevent or be construed as prohibiting the
commissioner from disclosing the content of an examination report, a preliminary
examination report or its results, or any related matter to the insurance division of
this or any other state or country, to law enforcement officials of this or any other
state, or to any agency of the federal government at any time, subject to the written
agreement of the recipient to hold such information confidential and to treat it in a
manner consistent with this part 6.

(5) Confidentiality of examination information. (a) Names and individual
identification data for all viators shall be considered private and confidential
information and shall not be disclosed by the commissioner unless required by law.

(b) (I) Except as otherwise provided in this part 6, all examination reports,
working papers, recorded information, and documents, and copies thereof,
produced by, obtained by, or disclosed to the commissioner or any other person in
the course of an examination made under this part 6, or in the course of analysis or
investigation by the commissioner of the financial condition or market conduct of a
licensee, are:

(A) Confidential by law and privileged;

(B) Not subject to article 72 of title 24, C.R.S.;

(C) Not subject to subpoena; and

(D) Not subject to discovery or admissible in evidence in any private civil
action.

(II) The commissioner is authorized to use the documents, materials, or other
information described in subparagraph (I) of this paragraph (b) in the furtherance of
any regulatory or legal action brought as part of the commissioner's official duties.

(III) For the purposes of this paragraph (b), this part 6 includes the law of
another state or jurisdiction that is substantially similar to this part 6.

(c) Documents, materials, or other information, including, but not limited to,
all working papers and copies thereof in the possession or control of the NAIC and
its affiliates and subsidiaries are:

(I) Confidential by law and privileged;

(II) Not subject to subpoena; and

(III) Not subject to discovery or admissible in evidence in any private civil
action if they are:

(A) Created, produced, or obtained by or disclosed to the NAIC and its
affiliates and subsidiaries in the course of assisting an examination made under this
part 6, or assisting the commissioner in the analysis or investigation of the financial
condition or market conduct of a licensee; or

(B) Disclosed to the NAIC or its affiliates and subsidiaries under paragraph
(d) of this subsection (5) by the commissioner.

(d) The commissioner or any person that received the documents, material,
or other information while acting under the authority of the commissioner, including
the NAIC and its affiliates and subsidiaries, is permitted to testify in any private civil
action concerning any confidential documents, materials, or information subject to
paragraph (a) of this subsection (5).

(e) In order to assist in the performance of the commissioner's duties, the
commissioner:

(I) May share documents, materials, or other information, including the
confidential and privileged documents, materials, or information subject to
paragraph (a) of this subsection (5), with other state, federal, and international
regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with
state, federal, and international law enforcement authorities if the recipient agrees
to maintain the confidentiality and privileged status of the document, material,
communication, or other information;

(II) May receive documents, materials, communications, or information,
including otherwise confidential and privileged documents, materials, or
information, from the NAIC and its affiliates and subsidiaries, and from regulatory
and law enforcement officials of other foreign or domestic jurisdictions, and shall
maintain as confidential or privileged any document, material, or information
received with notice or the understanding that it is confidential or privileged under
the laws of the jurisdiction that is the source of the document, material, or
information; and

(III) May enter into agreements governing the sharing and use of information
consistent with this subsection (5).

(f) No waiver of any applicable privilege or claim of confidentiality in the
documents, materials, or information shall occur as a result of disclosure to the
commissioner under this section or as a result of sharing as authorized in paragraph
(e) of this subsection (5).

(g) A privilege established under the law of any state or jurisdiction that is
substantially similar to the privilege established under this subsection (5) shall be
available and enforced in any proceeding in, and in any court of, this state.

(h) Nothing contained in this part 6 shall prevent or be construed as
prohibiting the commissioner from disclosing the content of an examination report,
a preliminary examination report or its results, or any related matter to the
commissioner of any other state or country, to law enforcement officials of this or
any other state or agency of the federal government at any time, or to the NAIC, if
the person receiving the report or matters relating thereto agrees in writing to hold
it confidential and in a manner consistent with this part 6.

(i) Nothing in this part 6 shall immunize a party who discloses information to
the commissioner from disclosing that information pursuant to an independent
inquiry or restrict the admissibility of such independently obtained information.

(6) Conflict of interest. (a) An examiner may not be appointed by the
commissioner if the examiner, either directly or indirectly, has a conflict of interest
or is affiliated with the management of, or owns a pecuniary interest in, any person
subject to examination under this part 6. This section shall not be construed to
automatically preclude an examiner from being:

(I) A viator;

(II) An insured in a viaticated policy; or

(III) A beneficiary in an insurance policy that is proposed to be the subject of
a viatical settlement contract.

(b) Notwithstanding any provision of paragraph (a) of this subsection (6) to
the contrary, the commissioner may retain from time to time, on an individual basis,
qualified actuaries, certified public accountants, or other similar individuals who are
independently practicing their professions, even though these persons may from
time to time be similarly employed or retained by persons subject to examination
under provisions of this part 6.

(7) Cost of examinations. The expenses incurred in conducting any
examination shall be paid by the licensee or applicant.

(8) Immunity from liability. (a) No cause of action shall arise nor shall any
liability be imposed against the commissioner, the commissioner's authorized
representatives, or any examiner appointed by the commissioner for any
statements made or conduct performed in good faith while carrying out the
provisions of this part 6.

(b) No cause of action shall arise from, nor shall any liability be imposed
against any person for, the act of communicating or delivering information or data
to the commissioner, the commissioner's authorized representative, or an examiner
pursuant to an examination made under this part 6, if the act of communication or
delivery was performed in good faith and without fraudulent intent or the intent to
deceive. This paragraph (b) does not abrogate or modify in any way any common
law or statutory privilege or immunity enjoyed by any person identified in paragraph
(a) of this subsection (8).

(c) A person identified in paragraph (a) or (b) of this subsection (8) shall be
entitled to an award of attorney fees and costs if he or she is the prevailing party in
a civil cause of action for libel, slander, or any other relevant tort arising out of
activities in carrying out the provisions of this part 6, and the party bringing the
action was not substantially justified in doing so. For purposes of this paragraph (c),
a proceeding is substantially justified if it had a reasonable basis in law or fact at
the time that it was initiated.

(9) Investigative authority of the commissioner. The commissioner may
investigate suspected fraudulent viatical settlement acts and persons engaged in
the business of viatical settlements.

Legislative History

Source: L. 2005: Entire part added, p. 1302, � 1, effective January 1, 2006.